Last month, the Fed raised interest rates by 75 basis points for the third consecutive time in response to higher-than-expected inflation in August. The central bank also hinted at more hikes to control the surging inflation. Since the rising interest rates are making borrowing expensive for individuals and corporates, the economy is expected to witness a recession early next year, and the stock market could continue seeing extreme volatility.

According to a CNBC Delivering Alpha investor survey, 58% of the 400 investors surveyed believe that the Fed is being too aggressive and more than 60% believe that the S&P 500 will end the year below the 4,000 mark. Moreover, the energy shortage in Europe and the ongoing Russia-Ukraine war add to the economic turbulence.

Given the backdrop, we think investors should avoid fundamentally weak stocks Wynn Resorts, Limited (WYNN) and Bed Bath & Beyond Inc. (BBBY).

Wynn Resorts, Limited (WYNN)

WYNN designs, develops, and operates integrated resorts through its Wynn Palace; Wynn Macau; Las Vegas Operations; and Encore Boston Harbor segments.

For the fiscal second quarter that ended June 30, 2022, WYNN’s total operating revenues decreased 8.2% year-over-year to $908.83 million. Net loss increased 23.1% from the prior-year quarter to $213.42 million, while operating loss came in at $52.03 million, up 76.2% year-over-year. Net loss per share came in at $1.14.

The consensus revenue estimate of $872.58 million for the fiscal quarter ending September 2022 indicates a 12.3% year-over-year decline. Analysts expect its EPS to come in at negative $0.98 in the same period. The company also missed the consensus EPS estimates in each of the trailing four quarters.

The stock has declined 24% year-to-date and 25.9% over the past year.

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

WYNN also has a Value and Stability grade of D. It is ranked #20 of 27 stocks in the D-rated Entertainment – Casinos/Gambling industry.

Click here to see the additional POWR Ratings for WYNN (Growth, Momentum, Sentiment, and Quality).

Bed Bath & Beyond Inc. (BBBY)

BBBY is an omnichannel retailer offering a range of domestic merchandise, including bed linens, bath items, kitchen textiles, home furnishing items, and other products through various websites and applications. Additionally, the company operates Decorist, an online interior design platform that provides personalized home design services.

In the fiscal second quarter that ended August 27, 2022, BBBY’s net sales decreased 27.6% year-over-year to $1.44 billion. Its gross profit declined 33.7% year-over-year to $398.26 million, while its operating loss widened 311.6% from the year-ago value to $346.20 million. BBBY’s net loss per share came in at $4.59, up 537.5% from the prior-year period.

Street expects BBBY’s loss per share to be $1.82 for the quarter ending November 2022. The consensus revenue estimate of $1.45 billion represents a 22.7% decline year-over-year for the same quarter.

BBBY’s stock has declined 58.9% year-to-date and 63.9% over the past year.

BBBY’s POWR Ratings reflect its poor prospects. The stock has an overall rating of F, which translates to Strong Sell in our proprietary rating system.

It has an F grade for Stability and Sentiment and a D for Quality. BBBY is ranked #59 out of the 62 stocks in the Home Improvement & Goods industry.

To see the other ratings of BBBY for Growth, Value, and Momentum, click here.

WYNN shares rose $0.98 (+1.52%) in premarket trading Tuesday. Year-to-date, WYNN has declined -24.02%, versus a -21.92% rise in the benchmark S&P 500 index during the same period.

About the Author: Komal Bhattar

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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