During strong markets, it can pay to be aware of companies seeing slowing momentum and distribution. These are likely to be the most vulnerable when the trend turns.
The POWR ratings can help you identify the weakest companies to avoid. Instead, investors should target stocks showing signs of increasing their earnings power.
Below, we provide a look at four of the latest POWR Rating downgrades: Alteryx (AYX), Norwegian Cruise Line Holdings (NCLH), Monro Muffler Brake (MNRO), and Qiwi (QIWI).
Alteryx (AYX)
Interestingly, AYX has been downgraded, because it operates provides cloud-based products that blend information from several sources, analyze it, and share it with others. This data can also be transmitted to tools for further use.
Check out the AYX POWR Ratings and you will find the stock has “D” grades in the Peer Grade, Trade Grade, and Buy & Hold Grade components. AYX is ranked 66th of 96 stocks in the Software – Application category.
AYX has a six-month price return of -15.79%. Furthermore, AYX has a forward P/E ratio of 189.66, indicating the stock is likely overpriced. Add in the fact that AYX executives recently stated its revenue forecasts have been lowered and investors have even more reason to jump ship.
Norwegian Cruise Line Holdings (NCLH)
Times are tough for NCLH and fellow cruise line operators. NCLH owns and operates the Norwegian Cruise Line, Regent Seven Seas Cruises, and Oceania Cruises. All in all, NCLH has 28 ships and nearly 60,000 berths.
The POWR Ratings reveal NCLH has an “F” grade in the Buy & Hold Grade component along with a “D” grade in the Industry Rank component. NCLH is ranked fourth of five stocks in the Travel – Cruises category.
The stock has a year-to-date price return of -53.95% along with a three-year price return of -50.84%. The bottom line is it is going to take a long time for the cruise industry to rebound. Even if passengers can board cruises in the first quarter or two of ’21 without fear, NCLH is still likely to struggle.
Monro Muffler Brake (MNRO)
Take a spin around the city closest to you and you are likely to find an MNRO location. Though MNRO has a solid business model, the company’s revenue has declined amidst the pandemic. People are driving less so MNRO is struggling. This automotive services provider should eventually rebound, assuming the vaccines prove effective and economic activity returns to normal at some point in ’21. However, until that time, MNRO might stagnate or decline even more.
The POWR Ratings show MNRO has “D” grades in the Peer Grade, Trade Grade, and Buy & Hold Grade components. MNRO is ranked 47th of 54 stocks in the Auto Parts sector. The stock has a year-to-date price return of -37.07% along with a five-year return of -25.81%.
Of the four analysts who have studied the stock, all four rates it as a “Hold”, meaning the stock is not worthy of your investing dollars. Furthermore, these analysts have set an average price target of $46.50, indicating there is more than a 4% downside. Add in the fact that MNRO’s forward P/E ratio is just under 40 and you have all the more reason to sell this overpriced stock.
Qiwi (QIWI – Rated “D” – Sell)
Processing payments is QIWI’s specialty. However, this is becoming an increasingly crowded space as time progresses. QIWI has an “F” grade in the Trade Grade component along with a “D” grade in the Peer Grade component.
QIWI is ranked 7th of nine stocks in the Foreign Consumer Finance category. The stock recently fell off a cliff after J.P. Morgan downgraded it. QIWI’s books are currently being audited. Accounting irregularities are the type of news no investor wants to hear.
Steer clear of QIWI or consider shorting the stock until more clarity about its accounting practices is provided.
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AYX shares fell $0.80 (-0.68%) in premarket trading Friday. Year-to-date, AYX has gained 16.42%, versus a 14.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
More Resources for the Stocks in this Article
Ticker | POWR Rating | Industry Rank | Rank in Industry |
AYX | Get Rating | Get Rating | Get Rating |
NCLH | Get Rating | Get Rating | Get Rating |
MNRO | Get Rating | Get Rating | Get Rating |
QIWI | Get Rating | Get Rating | Get Rating |