Shares had a dismal 2022 overall, but the market showed signs of life in July, posting the best returns of any month since November 2021. But even as stocks are poised to exit a market Bearish, a rising tide doesn’t necessarily lift all boats.
Some stocks that have fallen on hard times are still not ready to rebound, while others that have recently received negative news may still fall.
Here is a list of seven of the most worrying stocks to watch in Augustas well as an explanation of why investing in these may not be the best value for money at the moment.
Teladoc Health (TDOC)
- Share price as of August 4, 2022: $37.46
Teladoc Health has taken an absolute beating in 2022, down about 58% year-to-date to Aug. 4. At recent prices, the former pandemic darling is down 87% from its 2021 all-time high of $294.54. .
At these levels, the stock has perhaps unsurprisingly garnered some interest among bargain hunters, who believe that any stock down to this point is “value”. While that may indeed be the case over the long term, the stock’s short-term outlook is decidedly negative.
In April, the stock took a huge loss and cut its outlook for the full year, and shares fell almost 50% in response. Things weren’t much better in July, when the company announced another outsized loss, cut its forward estimates and suffered a 20% stock drop.
On August 2, two Wall Street analysts lowered their ratings on the stock, expressing concerns about the company’s short-term performance. While the stock may still have some long-term legs, stocks should probably be avoided in August.
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Mercury General Corporation (MCY)
- Share price as of August 4, 2022: $32.42
Under-tracked stocks like Mercury General are often high-risk, high-reward games. If things go well, analysts and investors could flock to the stock, pushing prices up quickly. But if the company is underperforming and remains under the radar, there is no buying pressure to increase the stock.
Mercury General is trailed by a single Wall Street analyst, who carries a “sell” rating on the stock. Since Wall Street is inherently bullish and reluctant to price a stock below “neutral” or “market performance,” to have its sole analyst proclaim that investors should sell stocks is a bold statement.
On August 2, Mercury General cut its dividend by 50%, citing “difficult business conditions” and “extraordinarily high rates of inflation.” For now, it seems like a good bet to stay away from insurer stocks.
- Share price as of August 4, 2022: $38.36
GameStop was the very definition of a “meme store” before anyone knew what it meant. Shares of the company have soared to glorious heights in 2021 as investors piled into stocks based on stock market bulletin board recommendations. Between buying herds and a massive price cut, stocks jumped 400% in a single week at the end of January 2021.
While there are still some rabid believers out there, the meme stock phenomenon has essentially died down in mid-2022. After the frenzy at the start of 2021, equities have essentially stalled over the past year, although to their credit they have avoided most of the carnage the global market has suffered in 2022. seems to be waiting for its next event rally, but that makes GameStop’s stock a speculation, not an investment.
AMC Entertainment (AMC)
- Share price as of August 4, 2022: $18.66
AMC Entertainment was another stock that powerfully benefited from the meme stock trend of 2021, but it looks like the company’s future prospects are finally resonating with investors. Shares of the cinema chain are down about 33% year-to-date, and analysts believe they need to fall further.
All six analysts covering the stock have an “underperform” consensus on the stock and a 12-month price target of $5.67, nearly 70% below current levels. The negative outlook and stock volatility make the company a potential powder keg for investors.
- Share price as of August 4, 2022: $35.66
In most market environments, Intel is a great investment. However, the company is in deep trouble in 2022. On July 28, the company recorded its biggest failure since 1999, with revenue falling 22%, missing consensus estimates by 14%.
Additionally, the company slashed its forward earnings estimates, citing delayed PC refresh cycles. Baird analysts downgraded the company, citing additional issues with the supply chain and changing consumer habits. Overall, it looks like Intel has some significant near-term issues to overcome before resuming its growth trends, making stocks easy to avoid for now.
- Share price as of August 4, 2022: $10.25
Snap shares are down an incredible 78% year-to-date and closer to 86% over the past year. Much like with Teladoc Health, these types of declines will no doubt generate buyer support from investors looking for “value”, but those looking for short-term results may want to look elsewhere.
On July 21, the company announced its weakest ever sales growth, in addition to slowing hiring and declining to offer forecasts. Snap reported that rising inflation and the possibility of an economic recession caused customers to cut advertising spending, which hurt the company’s revenue.
Shares of the company may eventually bottom, but when and where is just speculation at this point.
- Share price as of August 4, 2022: $41.06
Twitter is another stock that could well be a long-term winner, but in its current situation it is best avoided by most investors.
In May, controversial Tesla CEO Elon Musk announced that he would buy Twitter for $54.20 per share, which at the time represented a 38% premium to the current share price. In July, however, Musk said he would walk away from the deal. This could create a huge legal distraction for Twitter, with day-to-day sentiment driving market share up or down.
On July 22, Twitter reported a loss of $270 million for its June quarter, citing a drop in advertising driven by the uncertain economy and distractions caused by Musk’s takeover bid. Since these two factors always affect the company, it may be best for investors to take a wait-and-see approach with stocks.
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