After hitting a record high lately, stock markets have taken a breather ahead of earnings seasons and the Federal Reserve’s economic outlook. Also, the resurgence of COVID-19 cases in several parts of the world has muted investor enthusiasm. The situation calls for a more judicious approach to stock selection.
Reddit’s WallStreetBets (WSB) community, which looks to benefit from short squeezes by betting on stocks with high levels of short interest, could swing into action on their favorite stocks at any moment. So, fundamentally weak stocks that are WSB favorites could be risky bets now.
Palantir Technologies (PLTR)
Palantir Technologies offers a suite of software applications for integrating, visualizing, and analyzing information. The company’s software allows analysts at government organizations to collaborate and analyze large quantities of data. Of seven Wall Street analysts that have rated PLTR, four rated it Sell.
PLTR’s revenue for the fourth quarter, ended December 31, 2020, climbed 40% year-over-year to $322 million. The company’s new contracts for the quarter include Rio Tinto, PG&E, BP , U.S. Army, U.S. Air Force, FDA, and NHS. PLTR signed 21 contracts each worth more than $5 million. Despite upbeat revenue performance, the company continues to incur losses. Its loss per share fell to $0.08 from $0.29 posted in the same period last year.
A consensus revenue estimate for the full year, ended December 31, 2021, is $1.5 billion, representing a 34.5% year-over-year increase. Its EPS for the period is likely to grow at the rate of 49.4% per annum over the next five years.
PLTR ended yesterday’s trading session at $23.27, declining 1.2% over the year. During the past six months, PLTR rallied 135.1%.
PLTR’s weakness is also reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
To see additional POWR Ratings for Growth, Momentum, and Quality for PLTR, Click here.
GameStop Corporation (GME)
GME is engaged in the retail of multichannel video games, consumer electronics, and wireless services. It operates through the following segments: United States, Canada, Australia, and Europe.
Of seven analysts that have rated GME, four rated it Sell and four rated it Hold. Also, the consensus price target of $54.40 indicates a potential downside of 70.5%.
For the nine weeks ended April 3,GME’s preliminary sales increased 11% year-over-year. The company’s comparable store sales during the fourth quarter ended January 30, 2021 increased 6.5% year-over-year. Its global e-commerce sales surged 175% during the quarter. Its EPS for the quarter climbed to $1.19 from $0.32 posted in the same period last year. However, GME’s net sales of $2.1 billion included a strategic de-densification effort and a reduction of nearly 27% in European store operating days due to closures caused by the COVID-19 pandemic.
Wall Street expects GME’s revenue for the quarter ending April 30, 2021 to be $1.15 billion, representing a 7.8% year-over-year surge. Its EPS is likely to decline at the rate of 48.2% per annum over the next five years.
GME has surged 5870.9% over the past year to close yesterday’s trading session at $184.50. Over the past six months, the stock has rallied 1920.8%.
In our POWR Ratings system, GME has an F grade for both Stability and Sentiment. In the B-rated Specialty Retailers industry, it is ranked #30 of 36 stocks.
In addition to the POWR Rating grade we’ve just highlighted, one can see the GME ratings for Growth, Value, and Quality.
AMC Entertainment Holdings, Inc. (AMC)
AMC owns, operates, or holds interest in 348 movie theatres, with a total of 4,960 screens primarily in North America.
Of six analysts that have rated AMC, two rated it Sell and three rated it Hold. Also, the consensus price target of $6.38 indicates a potential downside of 37.5%.
AMC’s revenue for the fourth quarter ended December 31, 2020 plunged 88.8% year-over-year to $162.5 million. Its net loss per share widened to $6.21 from $0.13 posted in the prior year period. The theater operator incurred heavy losses in its past fiscal year l due to the COVID-19 pandemic. Globally, its attendance declined 91.3% year-over-year to 8 billion. The company’s CEO and President Adam Aron stated, “This past year has presented AMC with the most challenging market conditions in the 100-year history of the company.”
A consensus revenue estimate for the full year, ended March 31, 2021, is $158.3 million, indicating an 83.4% year-over-year decline. Its EPS for the period is likely to decline at the rate of 217% per annum over the next five years.
AMC ended yesterday’s trading session at $10.20, climbing 254.2% over the year. During the past six months, IAG declined 14%.
AMC’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of F, which equates to Strong Sell in our POWR Ratings system. AMC also has Stability and Sentiment Grades of F. In the Entertainment – Movies/Studios industry, it is ranked #7 of 9 stocks.
To see additional POWR Ratings for Growth, Value, Quality, and Momentum for AMC, Click here.
Sundial Growers Inc. (SNDL)
SNDL produces, distributes, and sells cannabis. Its strategy is to target the premium segment of the adult-use cannabis market.
Of four covering analysts, three have rated SNDL as a Sell. Also, the consensus price target of $0.74 indicates a potential decline of 27.5%.
During the fourth quarter, ended December 31, 2020, SNDL’s net revenue rose 8% year-over-year to $13.9 million, boosted by revenue growth of Vape Cartridges. The average gross selling price per gram equivalent of branded products declined to $4.14 due to industry price compression.
Analysts expect SNDL’s revenue for the quarter ending March 31, 2021 to be $10.65 million, representing a year-over-year decline of 52.5%. SNDL ended yesterday’s trading session at $1.02, rallying 92.9% over the past year. During the past six months, the stock soared 363.4%.
Due to its dismal prospects, SNDL has an overall rating of F, which translates to a Strong Sell in our POWR Rating system. SNDL has a Value, Sentiment, and Stability Grade of F. In the F-rated, 236-stock Medical – Pharmaceuticals industry, it is ranked #232.
Click here to see the additional POWR Ratings for SNDL (Growth, Momentum, and Quality).
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PLTR shares were trading at $23.11 per share on Wednesday afternoon, down $0.16 (-0.69%). Year-to-date, PLTR has declined -1.87%, versus a 8.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|PLTR||Get Rating||Get Rating||Get Rating|
|GME||Get Rating||Get Rating||Get Rating|
|AMC||Get Rating||Get Rating||Get Rating|
|SNDL||Get Rating||Get Rating||Get Rating|