The August jobs report showed that the economy added 315,000 jobs, and the unemployment rate rose to 3.7%. Despite the slower pace of payroll gains in August, analysts expect the Fed to remain as hawkish as it sounded at the Jackson Hole conference. The Fed is expected to put more weight on the upcoming CPI data.
Furthermore, the deepening yield curve inversion is raising recessionary concerns. Also, geopolitical tensions between China and Taiwan may exacerbate the market’s trouble.
According to renowned investor Jeremy Grantham, the U.S. stock market is still an unheard-of "superbubble" that will bring financial "tragedy" to investors when it bursts. He further added that the current financial crisis is entering its "final act" due to the deteriorating state of the economy.
Since concerns about the Fed's potential rate hikes are expected to keep the market volatile, fundamentally weak stocks Plug Power Inc. (PLUG), SoFi Technologies Inc. (SOFI), and Peloton Interactive Inc. (PTON) are best avoided now despite their high-volume trading.
Plug Power Inc. (PLUG)
PLUG provides end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, the stationary power market, and others in North America and internationally. PLUG has traded at an average trading volume of 22.3 million over the past three months.
During the second quarter ended June 30, 2022, PLUG’s net revenue increased 21.5% year-over-year to $151.27 million. However, its operating loss grew 63.9% from the year-ago value to $146.91 million. The company’s net income increased 73.9% year-over-year to $173.29 million.
Analysts expect PLUG’s EPS to decline at the rate of 40% per annum over the next five years. The stock has declined 26.6% over the past nine months and 4.6% year-to-date.
PLUG's POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates 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.
PLUG has been graded an F for Stability, Quality, and Sentiment. Within the C-rated Industrial – Equipment industry, it is ranked #86 of 92 stocks. To see additional POWR Ratings for Growth, Value, and Momentum for PLUG, click here.
SoFi Technologies Inc. (SOFI)
SOFI offers digital financial services. Lending; Technology Platforms; and Financial Services are the three operational segments of the company. The company's lending, financial services, and products enable its members to borrow, save, spend, invest and protect their money. The stock has traded at an average volume of 39.78 million over the past three months.
SOFI’s revenue increased 56.8% year-over-year to $362.53 million for the second quarter ended June 30, 2022. However, its net loss came in at $95.84 million, while its loss per share amounted to $0.12. In addition, its net income margin, ROE, and ROA are negative at 28.5%, 8.3%, and 2.7%, respectively.
The stock has declined 26.6% over the past nine months.
SOFI's weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The stock has an F grade for Stability and Quality and a D for Sentiment. In the F-rated Financial Services (Enterprise) industry, it is ranked #107 of 108 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the SOFI ratings for Momentum, Growth, and Value here.
Peloton Interactive Inc. (PTON)
PTON sells interactive fitness products in North America and worldwide. Under the brand names Peloton Bike, Peloton Bike+, Peloton Tread, and Peloton Tread+, it provides connected fitness products with touchscreens that stream live and on-demand classes.
The company markets and sells interactive fitness products through its retail showrooms and online at onepeloton.com. PTON has traded at an average trading volume of 14.65 million over the past three months.
For the fourth quarter ended June 30, 2022, PTON’s revenue declined 27.6% year-over-year to $678.7 million. Its operating loss surged 298.6% from the prior-year quarter to $1.20 billion, while its net loss increased 297.3% year-over-year to $1.24 billion. Its loss per share came in at $3.68.
The company’s EPS is expected to decline at the rate of 76.5% per annum over the next five years. Analysts expect its revenue to decline 14.4% year-over-year to $3.07 billion in fiscal 2023. The stock has declined 89.7% over the past year and 71.3% year-to-date.
PTON’s poor prospects are also apparent in its POWR Ratings. 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 Sentiment and a D for Stability and Quality. PTON is ranked #57 of 59 stocks in the C-rated Consumer Goods industry. Click here to see the additional POWR Ratings for PTON (Momentum, Value, and Growth).
PLUG shares rose $0.03 (+0.12%) in after-hours trading Friday. Year-to-date, PLUG has declined -8.36%, versus a -16.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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