Let’s take a look at some of the latest POWR Rating downgrades: Delta Air Lines (DAL), Stamps.com (STMP), Funko (FNKO), and Brigham Minerals (MNRL).
Delta Air Lines (DAL)
The airline industry has suffered over the previous 9 months for obvious reasons. Though DAL is one of the top four carriers in the United States, it has an uphill battle ahead as the rollout of the coronavirus vaccine has been slower than anticipated. It is quite concerning that nearly all of DAL’s revenue stems from the company’s airline segment.
Though DAL has moved up from $25 to $38 in recent months, there will be turbulence ahead, simply because people still fear the virus and are hesitant to travel in airplanes. It is quite possible investors take the profit off the table in the weeks to come, sending DAL right back down to the $20s.
When in doubt, consult the POWR Ratings. DAL has “D” grades in the Industry Rank, Trade Grade, and Buy & Hold Grade components. DAL is ranked 11th of 22 stocks in the Airlines segment. DAL’s ’20 price return was -30.77%. The stock’s three-year price return is -26.60%.
STMP’s web-based postage solutions are no longer giving investors reason for optimism. Though it is certainly convenient to buy and print postage with a home or work computer/printer, STMP recently slid from $250 down to $200 in merely two months.
STMP has “D” grades in the Peer Grade, Trade Grade, and Buy & Hold Grade components along with a “C” Industry Rank grade. STMP is ranked 27th of 38 publicly traded companies on the Internet – Services space. STMP has a three-month price return of -23.58%.
Though the sheer volume of mail in the United States has significantly spiked in recent months, STMP has not benefitted as expected. Once the pandemic ends, STMP will likely suffer a slowdown. In fact, the rollout of the vaccines is likely to send investors fleeing from STMP.
Head on out to your local mall or toy store and you are bound to find FNKO offerings in the form of dolls, plushies, bags, vinyl, homewares, wallets, and accessories. The company also sells its merchandise through eCommerce platforms to boot. However, the holiday season is over, meaning demand for FNKO’s toys will dissipate simply because they are unnecessary and the economy has the potential to continue contracting.
The POWR Ratings reveal FNKO has “D” grades in the Peer Grade, Trade Grade, and Buy & Hold Grade components. FNKO is ranked 10th of 15 stocks in the Entertainment – Toys & Video Games category. FNKO had a ’20 price return of -39.51%. The top analysts are bearish on FNKO, setting an average price target of $7.42, meaning there is more than 26% downside.
FNKO’s forward P/E ratio of 20.90 is fairly high because it sells conventional, non-electronic toys. The bottom line is it might not be a good idea to invest in a toy company that doesn’t sell items used on or about the ubiquitous screens that dominate our youngsters’ free time. Unless FNKO segues to video games, you should probably avoid the stock.
Brigham Minerals (MNRL)
MNRL, a mineral acquisition business, acquires gas and oil mineral rights across the United States. MNRL has not recovered from its summer high in the upper $15s. Though companies such as MNRL that own mineral royalties do not spend an abundance of cash in maintaining production, the company’s recent secondary stock offering essentially diluted existing shares, creating concern amongst investors.
The fact that the success of MNRL’s business is largely dictated by the price of gas and oil is concerning, simply because both have decreased in price this past year. MNRL has a forward P/E ratio over 22, meaning it is likely overpriced at its current trading level.
If you are still on the fence as to whether MNRL might be worth your money, consider the fact that the stock has “D” grades in the Peer Grade, Trade Grade, and Buy & Hold Grade components. Furthermore, MNRL had a ’20 price return of -43.40%.
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DAL shares fell $0.39 (-1.01%) in premarket trading Tuesday. Year-to-date, DAL has declined -3.68%, versus a -1.36% 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...
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