These investments seem pretty vulnerable right now.
Wall Street bounced back in a major way last week, and that was also the case for my three stocks to avoid. The three names I figured were going to move lower last week — Anthem ( ANTM -0.02% ), GameStop ( GME 3.52% ), and StoneCo ( STNE 42.04% ) — were up 3%, down 2%, and up 53%, respectively, averaging out to an 18% increase.
The surge in StoneCo was obviously going to be way too much to overcome. The S&P 500 soared 6.2% for the week, so while the market did beat two of those three calls, the overall 18% increase in my bearish calls means I was wrong. This hasn’t happened often in the past few months. The S&P 500 has now outperformed my bearish picks — meaning that I beat the market, as these are stocks I suggest investors avoid — in 18 of the past 22 weeks. This week, I see AMC Entertainment ( AMC 4.02% ), BuzzFeed ( BZFD 1.70% ), and Ollie’s Bargain Outlet Holdings ( OLLI 3.82% ) as stocks that you may want to consider steering clear from. Let’s go over my near-term concerns.
The country’s largest multiplex operator saw its stock climb more than 10% last week. I’m upbeat on AMC’s long-term prospects, but the near-term outlook is murky at best. After a promising bump in ticket sales late last year, folks are steering clear of the local movie theater again. Ticket sales so far this year are 42% below where they were at this point in 2019 — and 53% less through mid-March of 2018 and 2017.
Last week’s shocking purchase of a small stake in an upstart mining company also has all the makings of that “jump the shark” moment for AMC. Did you see the big run in the mining stock in the days before the deal was announced? That’s problematic, and so is gambling away money in an unrelated field after already diluting shareholders fivefold over the past two years. AMC has made some smart moves to grab market share among exhibitors, but it made a dumb move last week and the gravity-defying shares didn’t notice.
There’s a fair chance that AMC stock is trading higher a year from now, especially with a strong pipeline of movies on the way. I still think the next step in the near term is down after last week’s head-scratching move.
One of the companies reporting financial results this week is BuzzFeed. If you didn’t know that the online media company was public, that’s probably because it only started trading in December, when it became one of the last SPAC deals of 2021. It’s been a disaster, like so many SPAC debutantes.
How’s BuzzFeed doing these days? Revenue rose 31% through the first half of this year, only to decelerate to 20% in the third quarter. It will post its first report as a public company on Tuesday, and momentum is slipping.
BuzzFeed was already stumbling before hitting the market. Revenue rose less than 4% in back-to-back years before this past year’s bounce. However, last year’s recovery has been largely the result of ad revenue, as content revenue has declined through the first nine months of 2021. With year-over-year comparisons likely to be challenging as we’ve seen with ad-based platforms competing against enhanced results during political elections in late 2020, this week’s report could be a dud.
Ollie’s Bargain Outlet
There’s a brick-and-mortar chain with a winning streak that is about to end. Ollie’s Bargain Outlet has rattled off at least seven consecutive fiscal years of double-digit sales growth. The run should officially end on Wednesday afternoon, when it delivers its financial results for the fiscal fourth quarter that ended in January.
It’s easy to like Ollie’s, the 433-store chain with the “good stuff cheap” mantra that gives shoppers more bang for their buck. The problem is that the former market darling is sputtering with supply chain concerns cooling customer interest in the concept. Analysts see a slight decline in year-over-year revenue for the holiday quarter, with earnings per share taking a 32% drop. If you think Wall Street has it wrong, keep in mind that those same analysts have overestimated the retailer’s bottom line in back-to-back reports heading into this week’s update.
If you’re looking for safe stocks, you aren’t likely to find them in AMC, BuzzFeed, and Ollie’s this week.