Though the economy is returning to normal and unemployment is gradually decreasing, some stocks are undeserving of your investing dollars. There is still plenty of money to be made by shorting stocks and buying put options.
Let’s take a look at three of the latest POWR Ratings downgrades: Jumia (JMIA), Micronet Enertec Technologies (MICT) and Alaska Air Group (ALK).
JMIA, an e-commerce service provider, sells products ranging from clothing to sunglasses, watches, beauty items, health products and kids’ products. JMIA has F grades in the Sentiment and Value components of the POWR Ratings along with D grades in the Quality and Stability components.
Click here to learn more about how JMIA fares in the Momentum and Growth components. Of the 70 stocks in the Internet category, JMIA is ranked 64th. You can learn more about this industry by clicking here. JMIA’s year to date price return is -7.48%.
The top analysts are bearish on JMIA. The average price target for the stock is $13.67, meaning it has has downside potential of 64%. The analysts’ low target price for the stock is a mere $7.96.
Alterations in overarching investor sentiment and Treasury yields have pressured growth stocks such as JMIA to move lower in recent weeks. The bottom line is JMIA is in the red and will likely be there for several financial quarters or possibly even several years into the future. Another problem is JMIA is primarily reliant upon Africa’s infrastructure to transport its items. Africa’s infrastructure is still in development, meaning it will take some time for JMIA to hit its stride.
Micronet Enertec Technologies (MICT)
MICT, a mobile computing device provider, makes and markets computer systems, simulators, electronic instruments and test equipment for defense contractors. MICT also provides a trading technology that serves as an online brokerage and also as an avenue for wealth management. The company recently announced it will sell nearly 20 million shares of common stock, meaning the increased share count will dilute the value of existing shares.
MICT has F grades in the Quality, Stability and Value components of the POWR Ratings. Click here to learn more about how MICT fares in the Sentiment, Momentum and Growth components of the POWR Ratings. Of the 48 publicly traded companies in the Technology – Hardware space, MICT is ranked 46th. You can learn more about the Technology – Hardware space by clicking here.
MICT has a year to date price return of -2.88%. The stock’s three-month price return is -9.82%. The stock’s six-month price return is -41.79%.
Alaska Air Group (ALK)
ALK along with its partner regional carriers, provides flight service to 100+ cities throughout North America. However, the airline has struggled during the pandemic. It will take some time for air travel to return to normal, meaning ALK’s revenue might not return to normal for several financial quarters or even a year or longer.
ALK has D grades in the Growth, Value and Stability components. Click here to learn how ALK fares in the Sentiment, Quality and Momentum components.
Of the 28 stocks in the Airlines industry, ALK is ranked 16th. Click here to learn more about the stocks in this industry. ALK had a 2020 price return of -22.81%.
ALK recently reported flight bookings stagnated in November after a couple months of improvement. The decline spurred a sharp revenue slide for the airline, forcing it to burn that much more cash. ALK’s revenue dropped more than 60% in the fourth quarter of ’20, coming in at $808 million when analysts expected $825 million.
Though the federal government’s payroll support program for the airlines will certainly help, ALK has a long road ahead that will undoubtedly have setbacks along the way. Investors should remain far away from this stock until there is minimal threat of coronavirus transmission when flying.
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JMIA shares were trading at $39.40 per share on Tuesday afternoon, up $2.52 (+6.83%). Year-to-date, JMIA has declined -2.35%, versus a 9.03% 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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