3 Overvalued Stocks to Short in March

NASDAQ: VUZI | Vuzix Corporation News, Ratings, and Charts

VUZI – The benchmark indices are dropping, given the current geopolitical conflict and rapid rise in oil prices. Amid the market uncertainty, Vuzix (VUZI), Arcimoto (FUV), and AgEagle Aerial Systems (UAVS) might be the ideal picks for shorting this month, as they are trading at lofty valuations, despite their bleak fundamentals.

The Dow ended last week with a 1.3% loss after a plunging on Friday, thereby posting its fourth straight week in the red. The S&P 500 was also down about 1.3% over the past five days, while the Nasdaq dropped nearly 3%. The strong jobs report was overshadowed by the Russia-Ukraine conflict and rise in oil prices. 

Moreover, according to Pictet Asset Management, historically, a rise in crude oil prices of the level we are currently experiencing has pushed the United States economy toward a recession. Over the past 50 years, each time adjusted for inflation, oil prices rallied 50% above trend, a recession has followed.

That’s why today we’re highlighting 3 overvalued stocks from our Top 10 Shorts  screen, which is just 1 of the 10 screens in our POWR Screens 10 service (more on that below).  Vuzix Corporation (VUZI), Arcimoto, Inc. (FUV), and AgEagle Aerial Systems, Inc. (UAVS) might be ideal for shorting this month as they are trading at high valuations, despite their bleak fundamentals.

Vuzix Corporation (VUZI)

VUZI is a designer, manufacturer, marketer, and seller of augmented reality (AR) wearable displays and devices for global consumer and enterprise markets. The company’s offerings include M300XL, M400, and the M4000 series of smart glasses for industrial and commercial uses.

On March 4, VUZI announced that a Fortune 50 Online Retailer had placed a $200,000 follow-on order for Vuzix smart glasses. The company expects to expand the depth of Vuzix smart glasses usage this year and after. However, this might take some time to materialize.

In terms of its forward EV/Sales, VUZI is currently trading at 14.36x, 1,073.6% higher than the industry average of 1.22x. Its forward Price/Sales multiple of 21.08 is currently trading 2,083.8% higher than the industry average of 0.97.

For the fiscal fourth quarter ended December 31, VUZI’s total sales decreased 21.7% year-over-year to $3.31 million. Net loss rose 373.8% from the prior-year period to $17.01 million, while loss per share after accrued but not paid preferred dividends rose 200% from the prior-year quarter to $0.27.

The consensus EPS estimate of a negative $0.14 for the fiscal quarter ending March 2022 indicates a 16.7% year-over-year increase. Likewise, the consensus revenue estimate for the same period of $3.88 million reflects a decline of 0.9% from the prior-year quarter. Moreover, VUZI has missed consensus EPS estimates in three out of the trailing four quarters.

The stock has declined 63.4% over the past year and 32.3% year-to-date to close Friday’s trading session at $5.87.

VUZI’s POWR Ratings reflect this bleak outlook. The stock has an overall rating of F, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

VUZI has a Value, Stability, Sentiment, and Quality grade of F and a Growth and Momentum grade of D. It is placed in the 47-stock Technology – Electronics industry. Click here to see more of VUZI’s component grades.

Arcimoto, Inc. (FUV)

FUV is a designer, manufacturer, and seller of three-wheeled electric vehicles in the United States. The company’s flagship product is the Fun Utility Vehicle (FUV), which provides an experience of comfort for two passengers with cargo, parking, and operation.

On March 2, FUV announced a partnership with Directed Technologies, a supplier of innovative products and technologies solutions to leading automotive, government, and enterprise organizations for introducing the FUV and Deliverator in the Australian market. However, it might take some time before this partnership can realize substantial gains.

FUV’s forward EV/Sales multiple of 40.66 is currently trading 3,222.6% higher than the industry average of 1.22. In terms of its forward Price/Sales, the stock is trading at 46.11x, 4,677.5% higher than the industry average of 0.97x.

FUV’s total operating expenses increased 153.2% year-over-year to $8.23 million in the fiscal third quarter ended September 30. Net loss and net loss per common share rose 147.9% and 106.7% from the prior-year quarter to $11.51 million and $0.31, respectively.

Analysts expect FUV’s EPS for the quarter ending March 2022 to decrease 76.9% year-over-year to a negative $0.23.

Over the past year, the stock has declined 57.4% and 17.6% year-to-date to close Friday’s trading session at $6.41.

It’s no surprise that FUV has an overall F rating, which translates to a Strong Sell in our POWR Ratings system.

FUV has an F grade for Value, Stability, and Quality and a D grade for Growth and Sentiment. It is ranked last in the 69-stock Auto & Vehicle Manufacturers industry. The industry is rated F. To see FUV’s additional POWR Rating for Momentum, click here.

AgEagle Aerial Systems, Inc. (UAVS)

UAVS operates as a designer, developer, distributor, and supporter of unmanned aerial vehicles for the precision agriculture industry. The company’s offerings include FarmLens, a subscription-based cloud analytics service, and HempOverview, a software-as-a-solution web and map-based technology platform.

In terms of its trailing 12-month EV/Sales, UAVS is currently trading at 7.77x, 309.7% higher than the industry average of 1.90x. Its trailing 12-month Price/Sales multiple of 11.22 is currently trading 663.1% higher than the industry average of 1.47.

For the fiscal third quarter ended September 30, UAVS’ loss from operations increased 557.7% year-over-year to $3.80 million. Net loss and net loss per common share went up 551.7% and 400% from the same period the prior year to $3.77 million and $0.05, respectively.

The stock has declined 83.1% over the past year and 36.9% year-to-date to close Friday’s trading session at $0.99.

This poor prospect is reflected in UAVS’ POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.

UAVS has a Growth, Value, Stability, and Quality grade of F and a Sentiment grade of D. It is ranked last in the 78-stock Industrial – Machinery industry.

In addition to the POWR Ratings grades we’ve stated above, one can see the UAVS rating for Momentum here.

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VUZI shares were trading at $5.52 per share on Monday afternoon, down $0.35 (-5.96%). Year-to-date, VUZI has declined -36.33%, versus a -11.21% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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