Inflation declined in October and November, helping markets to breathe a sigh of relief. However, Federal rate hikes are expected to continue well into 2023. Amid such rate hikes, a recent Reuters poll of economists suggests a 60% chance of a U.S. recession in 2023.

Moreover, according to Refinitiv IBES data, profit growth at S&P 500 companies is expected to slow down to 4.9% in 2023 after rising 5.8% in 2022. Mass layoffs have already wreaked havoc in the United States amid the grim economic outlook.

Job cuts announced by U.S.-based employers jumped 13% to 33,843 in October 2022, the highest since February 2021. Also, the Fed’s median estimate for the unemployment rate is 4.6% for 2023 now, up from 4.4% in September.

Therefore, it could be wise to avoid fundamentally weak stocks Advanced Micro Devices, Inc. (AMD - Get Rating), Camber Energy, Inc. (CEI - Get Rating), NIO Inc. (NIO - Get Rating), and Peloton Interactive, Inc. (PTON) before 2023.

Advanced Micro Devices, Inc. (AMD - Get Rating)

AMD operates as a semiconductor company worldwide. The company operates in two segments, Computing and Graphics; and Enterprise, Embedded, and Semi-Custom.

AMD’s forward EV/Sales of 4.79x is 81.3% higher than the industry average of 2.66x. Its forward Price/Sales of 4.91x is 88.6% higher than the industry average of 2.60x.

AMD’s trailing-12-month CAPEX/Sales of 1.80% is 27.3% lower than the industry average of 2.48%, while its trailing-12-month asset turnover ratio of 0.58% is 8.4% lower than the industry average of 0.63%.

AMD’s operating loss came in at $64 million for the third quarter that ended September 24, 2022, compared to an income of $948 million in the year-ago period. Moreover, its net income came in at $66 million, down 92.8% year-over-year. Also, its EPS came in at $0.04, down 94.7% year-over-year.

Street expects AMD’s revenue to decrease 5.6% year-over-year to $5.56 billion for the quarter ending March 2023. Its EPS is expected to fall 38.1% year-over-year to $0.70 for the same period. Over the past year, the stock has lost 49.2% to close the last trading session at $68.93. 

AMD has an overall rating of D, which equates to Sell in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

AMD has an F grade for Stability and a D grade for Growth and Quality. Within the Semiconductor & Wireless Chip industry, it is ranked #89 out of 93 stocks.

Beyond what is stated above, we’ve also rated AMD for Value, Sentiment, and Momentum. Get all the AMD ratings here.

Camber Energy, Inc. (CEI - Get Rating)

CEI operates as an independent oil and natural gas company. It acquires, develops, and sells crude oil, natural gas, and natural gas liquids from various known productive geological formations in Kansas, Louisiana. It provides energy and power solutions to industrial and commercial users.

On November 11, 2022, CEI disclosed that it had received a warning letter from NYSE notifying the company that its securities had been selling at a low price /share for more than the permissible time. CEI continues to trade under $1 to date.

CEI’s trailing-12-month Price/Sales multiple of 48.85x is substantially higher than the 1.30x industry average. Also, its trailing-12-month EV/Sales multiple is trading at 147.53, substantially higher than the industry average of 1.91.

CEI’s trailing-12-month ROTA of negative 26.71% is lower than the industry average of 6.88%, while its trailing-12-month asset turnover ratio of 0.02% is lower than the industry average of 0.64%.

CEI’s loss from operations came in at $1.22 million for the quarter that ended September 30, up 32.8% year-over-year. The company’s total operating expenses increased 34.9% year-over-year to $1.38 million. Its current assets came in at $2.60 million for the period ended September 30, 2022, compared to $5.94 million for the period ended December 31, 2021.

Over the past year, the stock has lost 92.2% to close the last trading session at $0.08.

CEI has an overall D rating, equating to Sell in our POWR Ratings system. It also has a D grade for Stability and Sentiment. It is ranked #90 out of 101 stocks in the Energy – Oil & Gas industry. Click here to access the additional POWR Ratings for Value, Quality, Growth, and Momentum for CEI.

NIO Inc. (NIO - Get Rating)

Headquartered in Shanghai, China, NIO markets smart electric vehicles. The company provides five, six, and seven-seater electric SUVs and smart electric sedans. In addition, it manufactures e-powertrains, battery packs, and components and offers sales and after-sales management activities.

In terms of its forward EV/Sales, NIO is trading at 2.44x, 124.3% higher than the 1.09x industry average. Its forward Price/Sales multiple of 2.71 is 216.5% higher than the industry average of 0.86.

NIO’s trailing-12-month EBIT margin of negative 26.33% is lower than the industry average of 7.89%, while its trailing-12-month asset turnover ratio of 0.52% is 48.7% lower than the industry average of 1.01%.

NIO’s total revenue came in at $1.83 billion for the third quarter that ended September 30, 2022, down 32.6% year-over-year. Its gross profit decreased 12.9% year-over-year to $243.92 million. The company’s total operating expenses increased 87.8% year-over-year to $787.99 million.

Analysts expect NIO’s EPS to decline 30.4% year-over-year to negative $0.28 for the quarter ending December 2022. It missed EPS estimates in three of the trailing four quarters. Over the past year, the stock has lost 62.5% to close the last trading session at $12.10.

NIO’s overall F rating equates to a Strong Sell in our POWR Ratings system. Also, the stock has an F grade for Stability and a D for Value, Sentiment, and Quality. NIO is ranked #54 out of 62 stocks in the D-rated Auto & Vehicle Manufacturers industry.

We have also rated NIO for Growth and Momentum. Get all NIO ratings here.

Peloton Interactive, Inc. (PTON - Get Rating)

PTON operates an interactive fitness platform in North America and internationally. The company offers connected fitness products with a touchscreen that streams live and on-demand classes under the Peloton Bike, Peloton Bike+, Peloton Tread, and Peloton Tread+ names.

PTON’s forward EV/Sales of 2.12x is 94.5% higher than the industry average of 1.09x. Its forward Price/Sales of 1.55x is 80.7% higher than the industry average of 0.86x.

PTON’s trailing-12-month EBIT margin of negative 40.79% is lower than the industry average of 7.89%, while its trailing-12-month asset turnover ratio of 0.85% is 16.3% lower than the industry average of 1.01%.

PTON’s total revenue came in at $616.50 million for the 2023 first quarter that ended September 30, 2022, down 23.4% year-over-year. Its gross profit came in at $217.20 million, down 17.4% year-over-year. In addition, its net loss came in at $408.50 million, up 8.6% year-over-year.

PTON’s revenue is expected to decrease 25.5% year-over-year to $2.67 billion in 2023. It missed EPS estimates in all four trailing quarters. Over the past year, the stock has lost 69% to close the last trading session at $12.16. 

PTON’s poor prospects are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell. PTON has an F grade for Sentiment and Stability and a D for Value and Quality. It is ranked #57 out of 59 stocks in the Consumer Goods industry. 

Click here to access the additional ratings for PTON (Growth and Momentum).

AMD shares were trading at $66.50 per share on Thursday afternoon, down $2.43 (-3.53%). Year-to-date, AMD has declined -53.79%, versus a -17.02% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

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