StockNews’ exclusive POWR Ratings are updated every day to provide investors with the inside scoop on stocks trending both upward and downward. Though the market has been hot of late, there are some clear losers.

POWR Ratings has determined MOMO Inc. (MOMO), Kohl’s Corporation (KSS), and The Goodyear Tire & Rubber Company (GT) to be Strong Sells. Let’s take a look at these stocks to understand why they are declining amidst this rally.

MOMO Inc. (MOMO – Rated “F” – Strong Sell)

It was not long ago when investors strongly favored internet dating apps. MOMO was one of these stocks, but times have changed. Dating has proven quite tricky amidst the coronavirus pandemic.

MOMO has partially segued from providing online dating services to a comprehensive social entertainment app. The bulk of MOMO users are based in China. MOMO now offers a litany of tools, services, features, functionalities, and even mobile games. MOMO offerings also extend to paid emoticons.

The POWR Ratings have MOMO ranked #85 of 115 China stocks with both an F Trade Grade and an F Buy & Hold Grade, though MOMO has an A Industry Rank. MOMO has negative price returns over various periods. The stock has a -51.16% return over the past three years, a -43.74% return over the past year, and a -45% return over the past six months. 

MOMO has not yet recovered from its pre coronavirus sell-off price of $20. We can’t assume MOMO is a value stock because it has a forward P/E ratio of 8.80. The company’s adjusted net income was down nearly 20% in the latest quarter. 

Kohl’s Corporation (KSS Rated “F” – Strong Sell)

It was not long ago when KSS was one of America’s top retail stores, providing a wide array of products to the country’s middle-class consumers. The coronavirus changed almost everything, including KSS’s chances of success. KSS has more than 1,100 stores across the U.S. However, consumers have shifted to online shopping for products due to stay-at-home orders.

POWR Ratings have KSS ranked in the bottom third of stocks in the Fashion & Luxury Industry with both an F Trade Grade and an F Buy & Hold Grade. KSS has a six-month price return of -55%. The stock’s one-year return is almost -50%. KSS has a five-year return of -56%.

The average analyst price target for the stock is $20.41, which could lead to more downside. Though KSS had a bit of a dead cat bounce after the rapid decline spurred by COVID-19, it has leveled off around $20 in recent months. If a second wave of the virus emerges, KSS will likely test its 52-week low of $10.89.

The Goodyear Tire & Rubber Company (GT Rated “F” – Strong Sell)

Though the economy has reopened, people are still spending most of their time at home due to fear of the virus, income insecurity, and a general reluctance to interact with others who might unknowingly transmit the virus. As a result, GT has paid quite the steep price. Less driving means fewer tires are sold. This could lead to a diminished bottom line for GT.

GT also performs automobile repair. However, with a significant number of workers shifting to work from home, fewer cars are on the road, meaning there is less need for repairs.

The POWR Ratings have GT ranked 41st out of 50 stocks in the Auto Parts Industry. The stock has an F Trade Grade and an F Buy & Hold Grade. In terms of performance, GT has a -40% six-month return and a -38% one-year price return. 

Analysts insist this stock is overpriced at its current price of $8.82. They have set a price target under $8 for the stock, indicating GT has more than 10% downside remaining before it is reasonably priced.

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GT shares fell $0.07 (-0.80%) in after-hours trading Thursday. Year-to-date, GT has declined -42.88%, versus a -3.52% 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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