Although October inflation data came in lower than expected, showing signs that rising prices were finally cooling, inflation is far from the Fed’s target of 2%.

Moreover, the odds of a recession are rising as the Fed continues its rate hikes to fight the price pressures. The chance of a recession over 2023 has climbed to 65% from 60% in October. In addition, the University of Michigan’s consumer sentiment dropped to 54.7 in November, down 8.7% month-over-month.

Furthermore, amid surging tech layoffs, jobless expectations are expanding. Around 43% of participants in the New York Fed’s October survey expected the U.S. unemployment rate to be higher a year from now.

Given the grim outlook, it could be wise to avoid fundamentally weak stocks NVIDIA Corporation (NVDA - Get Rating), Carnival Corporation & plc (CCL - Get Rating), AMC Entertainment Holdings, Inc. (AMC - Get Rating), Peloton Interactive, Inc. (PTON - Get Rating), and Mullen Automotive, Inc. (MULN - Get Rating), which have been declining in price.

NVIDIA Corporation (NVDA - Get Rating)

NVDA provides graphics, computing, and networking solutions in the United States, Taiwan, China, and internationally. Its segments are Graphics and Compute & Networking.

On November 17, 2022, a class action suit was filed at a federal court in California over claims that NVDA’s new RTX 4090 graphics card burnt or melted power cables.

NVDA’s forward E.V./Sales of 15.18x is 443.2% higher than the industry average of 2.79x. Its forward Price/Sales of 14.68x is 480.2% higher than the industry average of 2.53x.

NVDA’s revenue came in at $5.93 billion for the third quarter that ended October 30, 2022, down 16.5% year-over-year. Its non-GAAP net income came in at $1.46 billion, down 51% year-over-year. Also, its non-GAAP EPS came in at $0.58, down 50.4% year-over-year.

NVDA’s revenue is expected to decline 20.3% year-over-year to $6.09 billion for the quarter ending January 2023. Its EPS is expected to fall 42.4% year-over-year to $0.76 for the same period. The stock has lost 46.7% year-to-date to close the last trading session at $156.77.

NVDA’s POWR Ratings reflect its poor prospects. It has an overall grade of D, which indicates a Sell. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

Also, the stock has a D grade for Growth, Value, and Stability. Click here to access the additional POWR Ratings for NVDA (Momentum, Sentiment, and Quality). NVDA is ranked #82 out of 92 stocks in the Semiconductor & Wireless Chip industry.

Carnival Corporation & plc (CCL - Get Rating)

CCL operates as a leisure travel company. Its ships visit approximately 700 ports under the Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (U.K.), and Cunard brand names.

CCL’s forward E.V./Sales of 3.38x is 199.4% higher than the industry average of 1.13x. Its forward Price/Sales of 0.98x is 15.1% higher than the industry average of 0.85x.

For the third quarter that ended August 31, 2022, CCL’s revenues came in at $4.30 billion, up 688.5% year-over-year. However, its operating costs and expenses came in at $4.58 billion, up 76.1% year-over-year.

Moreover, its cash and cash equivalents came in at $7.07 billion for the period ended August 31, 2022, compared to $8.94 billion for the period ended November 30, 2021.

Street expects CCL’s EPS to decrease 151.4% per annum for the next five years. It missed EPS estimates for all four trailing quarters. The stock has lost 52.7% year-to-date to close the last trading session at $9.51.

CCL’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. In addition, the stock has an F grade for Stability and a D for Value, Sentiment, and Quality.

We also have graded CCL for Growth and Momentum. Click here to access all of CCL’s ratings. It is ranked #2 out of four stocks in the F-rated Travel – Cruises industry.

AMC Entertainment Holdings, Inc. (AMC - Get Rating)

AMC and its subsidiaries engage in the theatrical exhibition business. The company owns, operates, or has interests in theaters in the United States and Europe.

AMC’s forward E.V./Sales of 3.29x is 71.5% higher than the industry average of 1.92x, while its forward EV/EBITDA of 99.31x is substantially higher than the 8.44x industry average.

AMC’s total revenues came in at $968.40 million for the third quarter that ended September 30, 2022, up 26.9% year-over-year. However, its operating costs and expenses came in at $1.08 billion, up 19.3% year-over-year. Its adjusted EBITDA came in at negative $12.90 million, compared to negative $5.40 million in the year-ago period.

Analysts expect AMC’s EPS to decline 217% per annum for the next five years. The stock has lost 55.8% year-to-date to close the last trading session at $7.39.

AMC’s overall D grade equates to a Sell in our proprietary rating system. Also, the stock has an F grade for Stability and a D for Value, Sentiment, and Quality.

Click here to access the additional POWR Ratings for AMC (Growth and Momentum). It is ranked last among seven stocks in the F-rated Entertainment – Movies/Studios industry.

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.

PTON’s forward E.V./Sales of 2.08x is 90% higher than the industry average of 1.09x. Its forward Price/Sales of 1.39x is 62.5% higher than the industry average of 0.86x.

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 36.4% year-over-year to $721.10 million for the quarter ending December 2022. It missed EPS estimates in all four trailing quarters. The stock has lost 70% year-to-date to close the last trading session at $10.89.

PTON’s overall F rating equates to a Strong Sell in our POWR Ratings system. It has an F grade for Stability and Sentiment and a D for Value and Quality. 

Click here for additional PTON ratings (Growth and Momentum). PTON is ranked #57 out of 59 stocks in the Consumer Goods industry.

Mullen Automotive, Inc. (MULN - Get Rating)

Electric vehicle company MULN manufactures and distributes electric vehicles. It also operates CarHub, a digital platform that leverages A.I. to offer an interactive solution for buying, selling, and owning a car.

Its trailing-12-month Price/Book of 7.12x is 243.3% higher than the 2.07x industry average.

MULN’s trailing-12-month ROTC and ROTA of negative 618.14% and 169.94% are significantly lower than the industry average of 6.67% and 4.74%, respectively.

MULN’s loss from operations came in at $18.22 million for the quarter that ended June 30, 2022, up 184.5% year-over-year. Also, its net loss came in at $59.47 million, up 289.9% year-over-year.

The stock has lost 94.8% year-to-date to close the last trading session at $0.27.

MULN has an overall F grade, equating to a Strong Sell in our POWR Ratings system. Also, it has an F grade for Value and Stability and a D for Sentiment and Quality.

Click here to access the MULN rating for Growth and Momentum. It is ranked #57 out of 64 stocks in the D-rated Auto & Vehicle Manufacturers industry.

NVDA shares were trading at $156.40 per share on Friday morning, down $0.37 (-0.24%). Year-to-date, NVDA has declined -46.79%, versus a -15.71% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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