The Fed launched two back-to-back 75 bps rate hikes in June and July and is likely to maintain its hawkish stance in the September meeting as well, despite easing inflation.
Victoria Fernandez, the chief market strategist at Crossmark Global Investments, said, “For me, there’s not enough evidence for the Fed to make a huge pivot from where they are. I still think they’re considering 50, 75 basis points at the September meeting.”
Such extended monetary tightening might mar the performance of the interest rate-sensitive Nasdaq 100, which has lost 16.3% year-to-date. Moreover, lingering macroeconomic headwinds are concerning. According to Statista, there is a 5.9% probability that the United States will fall into another recession by June 2023, up from a previous estimate of 4.1%.
Furthermore, JPMorgan Chase CEO Jamie Dimon recently projected that there is a 20% to 30% chance of a “harder recession” and a similar chance of “something worse.”
Given the near-term uncertainties, we think it might be best to avoid popular Nasdaq 100 stocks Advanced Micro Devices, Inc. (AMD), Blackstone Inc. (BX), and BlackRock, Inc. (BLK) at this hour, considering their declining financials.
Advanced Micro Devices, Inc. (AMD)
AMD operates as a semiconductor company worldwide. The company has two segments- Computing and Graphics; and Enterprise, Embedded, and Semi-Custom. It serves original equipment manufacturers, public cloud service providers, original design manufacturers, system integrators, independent distributors, online retailers, and add-in-board manufacturers.
AMD’s net revenue increased 70.1% year-over-year to $6.55 billion for the second quarter ended June 25, 2022. However, its operating income came in at $526 million, down 36.7% year-over-year. Also, its net income came in at $447 million, down 37% year-over-year, while its EPS decreased 53.4% year-over-year to $0.27.
AMD’s forward EV/S of 6.12x is 95.7% higher than the industry average of 3.12x, while its forward P/S of 6.22x is 100% higher than the industry average of 3.12x.
The stock has lost 29.8% year-to-date to close the last trading session at $101.01.
AMD’s POWR Ratings reflect its poor prospects. It has an overall grade of D, which indicates a Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a D grade for Stability. Click here to access the additional POWR Ratings for AMD (Growth, Value, Momentum, Sentiment, and Quality). AMD is ranked #85 out of 95 stocks in the Semiconductor & Wireless Chip industry.
Blackstone Inc. (BX)
BX is an alternative asset management firm specializing in real estate, private equity, hedge fund solutions, credit, secondary funds of funds, public debt and equity, and multi-asset class strategies. It invests in early-stage companies and also provides capital markets services.
On August 9, 2022, BX’s subsidiaries completed the acquisition of all of the outstanding shares of American Campus Communities, Inc., the largest developer, owner, and manager of high-quality student housing communities in the United States.
Also, on July 20, 2022, BX’s affiliates completed the acquisition of all of the outstanding shares of PS Business Parks, Inc. However, these acquisitions might strain its already deteriorating financials.
BX’s total revenues decreased 88.1% year-over-year to $629.22 million for the 2022 second quarter. Its net loss came in at $29.39 million, compared to a net income of $1.31 billion in the year-ago period. Moreover, its loss per share came in at $0.04 compared to an EPS of $1.82 in the prior-year period.
BX’s forward P/S of 5.73x is 89.9% higher than the industry average of 3.02x. Its forward P/Book of 14.91x is significantly higher than the industry average of 1.23x.
BX’s revenue is expected to decline 32.6% year-over-year to $3.01 billion for the quarter ended December 2022. Its EPS is expected to decrease 33.9% year-over-year to $1.13 for the same period. The stock has lost 16% year-to-date to close the last trading session at $108.68.
BX has an overall D grade, equating to Sell in our POWR Ratings system. Also, it has a D grade for Growth, Value, Stability, and Sentiment.
BlackRock, Inc. (BLK)
BLK is a publicly owned investment manager. The firm primarily provides services to institutional, intermediary, and individual investors. The firm employs liquidity, asset allocation, balanced, real estate, and alternative strategies to make its investments.
For the second quarter ended June 30, 2022, BLK’s total revenue decreased 6.1% year-over-year to $4.53 billion. Its net income came in at $1.08 billion, down 21.8% year-over-year. The company’s EPS came in at $7.06, down 20.9% year-over-year.
BLK’s forward EV/S of 6.42x is 122.5% higher than the industry average of 2.89x. Its forward P/S of 6.23x is 106.6% higher than the industry average of 3.02x.
Street expects BLK’s revenue to decrease 13.7% year-over-year to $4.36 billion for the quarter ended September 2022. Its EPS is expected to decline 26% year-over-year to $8.10 for the same period. The stock has lost 17.5% year-to-date to close the last trading session at $755.82.
BLK’s POWR Ratings are consistent with this bleak outlook. The stock has a D grade for Growth and Value.
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AMD shares were trading at $100.91 per share on Tuesday morning, down $0.10 (-0.10%). Year-to-date, AMD has declined -29.87%, versus a -9.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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