Recently, stocks have tumbled on concerns over the health of the U.S. financial system, strong jobs report, sticky inflation, and the collapse of the regional banks. As the road ahead towards stability seems bumpy, we think it could be wise to steer clear of ‘worst of the worst’ stocks PAVmed Inc. (PAVM), PetVivo Holdings, Inc. (PETV), and Sphere 3D Corp. (ANY).

In its quest to tame the persistently high inflation, the Fed raised the benchmark interest rate for the ninth time. Yet it remains far above the 2% annual target. Investor sentiment has broadly soured of late, with the S&P 500 down by 12.8% year-to-date.

On top of it, the upheaval in the financial system that followed the collapse of two major U.S. banks has raised the likelihood that lending standards would become sharply more restrictive. The emerging signs of a credit crunch are adding to the worries about the stability of the financial system.

As a result, recession fears have reignited that appeared to have abated just a few weeks ago. AXA Investment Managers Chief Economist Gilles Moec said, “There is a sizeable risk that the ongoing banking trouble triggers a ‘sudden stop’ in lending which would then send the economy into the sort of recession which would go beyond what is strictly needed to tame inflation.”

Therefore, as the outlook darkens, it might be wise to stay away from fundamentally weak stocks PAVM, PETV, and ANY.

PAVmed Inc. (PAVM)

PAVM is a multi-product, commercial-stage medical technology company that operates through four divisions: Medical Devices; Diagnostics; Digital Health; and Emerging Innovations.

In terms of forward EV/Sales, PAVM is trading at 14.59x, 296.2% higher than the industry average of 3.68x. Likewise, its forward Price/Sales multiple of 9.86 is 144.1% higher than the industry average of 4.04x.

For the fiscal fourth quarter that ended December 31, 2022, PAVM’s revenue decreased 62.7% year-over-year to $112 thousand. Its non-GAAP operating expenses increased 18.4% year-over-year to $18.24 million. The company’s attributable net loss and net loss per share amounted to $472.65 million and $0.28, widening 18.8% and 9.5%, respectively, from the same period. Also, its adjusted EBITDA loss came in at $18.81 million, up 10.5% from the year-ago value.

Analysts expect the company’s EPS to remain negative in the fiscal year 2023, and it is expected to decline by 3.3% in the current quarter (ending March 31, 2023). Moreover, it missed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has slumped 76.3% to close the last trading session at $0.36.

PAVM’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

It has an F grade for Value, Momentum, and Quality and a D for Growth, Stability, and Sentiment. Click here to see all the ratings for PAVM.

PetVivo Holdings, Inc. (PETV)

PETV is an emerging biomedical device company focused on the manufacturing, commercialization, and licensing of innovative medical devices and therapeutics for pets. It has a pipeline of seventeen products for the treatment of animals and people, while its leading product is Spryng, a veterinarian-administered intraarticular injection.

In terms of forward EV/Sales and Price/Sales, PETV is trading at 32.80x and 32.89x, which are 790.3% and 713.8% higher than the industry averages of 3.68x and 4.04x, respectively.

For the third quarter of the fiscal year 2022, which ended December 31, PETV’s operating loss widened 39.9% year-over-year to $2.32 million. The company reported a net loss and a loss per share of $2.31 million and $0.23, widening 40.8% and 35.3% year-over-year, respectively.

Analysts expect PETV’s EPS to remain negative for the fiscal years 2023 and 2024. Its loss per share for the fourth quarter (ending March 31) is expected to be $0.21. Moreover, it has a grim earnings surprise history, missing the consensus revenue estimates in each of the trailing four quarters. PETV’s shares have lost 6.5% over the past month to close the last trading session at $2.86.

PETV’s bleak outlook is reflected in its overall F rating, equating to Strong Sell in our POWR Ratings system. It also has an F grade for Value, Stability, and Quality and a D for Growth and Momentum. PETV is ranked last in the D-rated Medical – Devices & Equipment industry.

Click here to access PETV’s rating for Momentum.

Sphere 3D Corp. (ANY)

Operating as a Toronto-Canada-based carbon-neutral bitcoin mining company, ANY delivers data management solutions through the hybrid cloud, cloud, and on-premises implementations directly and through its reseller network and professional services organization. Its information technology solutions include Hybrid Virtualization Engine (HVE) ConneXions, Unified ConneXions (UCX), SnapServer, and SnapMine.

In terms of trailing-12-month EV/Sales, ANY is trading at 11.25x, 310% higher than the industry average of 2.74x. Also, its trailing-12-month Price/Sales multiple of 3.88 is 47% higher than the industry average of 2.64x.

During the third quarter that ended on September 30, 2022, ANY’s loss from operations widened 306.4% year-over-year to $10.34 million. Its net loss available to common shareholders came in at $20.52 million, widening 699.2% from the same quarter the prior year. Also, its loss per share amounted to $0.31, up 342.9% year-over-year.

ANY’s trailing-12-month gross profit margin of 40.59% is 19.4% lower than the industry average of 50.35%. Likewise, the stock’s trailing-12-month ROCE, ROTC, and ROTA of negative 44.82%, 15.41%, and 40.61% compare to the industry averages of 2.69%, 2.06%, and 0.67%, respectively.

The stock has plunged 47% over the past nine months and 87.1% over the past year to close its last trading session at $0.33.

ANY’s POWR Ratings reflect this weak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. It also has an F grade for Value, Stability, and Quality and a D for Growth and Momentum. Out of 148 stocks in the F-rated Software – Application industry, it is ranked last.

In addition to the POWR Ratings just highlighted, you can see ANY’s rating for Sentiment here.

What To Do Next?

Get your hands on this special report:

7 SEVERELY Undervalued Stocks

The best part of the recent bear market is that there are thriving companies trading at tremendous discounts to fair value.

This combination of stellar earnings growth and low price provides a great catalyst for investor success.

And this report focuses on the 7 best of these stocks primed to soar in the weeks ahead. Click below to claim your copy now.

7 SEVERELY Undervalued Stocks

PAVM shares were trading at $0.36 per share on Wednesday afternoon, down $0.01 (-2.25%). Year-to-date, PAVM has declined -25.00%, versus a 4.90% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

More Resources for the Stocks in this Article