4 potential short-term stocks to avoid this week
The meme stocks craze is again on the rise. Speculative trading caused an uproar on Wall Street in 2021, but quickly died down as markets turned volatile. In the current situation, market watchers are skeptical of stock market rallies.
A short press can cause the price of a stock to skyrocket to levels that do not justify its fundamentals. However, the strategy of taking advantage of a stock’s short-term rally carries its own risks.
Additionally, at their July meeting, Federal Reserve officials expressed their commitment to increase interest rates if necessary bring inflation back close to their 2% target, even if this means slowing economic growth and reducing consumer spending. This could induce more volatility in the market.
In this context, we believe that these potential near-term WeWork Inc. shares (WE), Sientra, Inc. (HIS), Lemonade, Inc. (LMND) and Stoke Therapeutics, Inc. (STOCK) may be best avoided this week.
WeWork Inc. (WE)
WE provides flexible workspace solutions to individuals and organizations around the world. The company offers workstations, private offices and various equipment and services. The stock has a 11.90% short float.
On July 19, the company announced the launch of WeWork Workplace, a new space management solution. The workplace should provide businesses with a universal platform for managing office space inventory, improving employee experience, and optimizing space. However, the gains from the new offer could be stretched for a long time.
For the six months ended June 30, WE’s net cash provided by financing activities decreased 69.8% year over year to $408 million. Cash, cash equivalents and restricted cash the balance was $632 million, down 26.1% from the prior year period.
Analysts expect WE’s EPS to be negative $0.45 for the fiscal quarter ending September 2022.
The stock is down 39% year-to-date and 24.9% over the past three months to close its last trading session at $5.25.
We s POWR Rankings reflect these bleak outlooks. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a Value and Stability rating of F and a Growth, Sentiment and Quality rating of D. In the 43 stocks Real estate services industry, WE is ranked last. The industry is rated D. Click here for additional POWR ratings for WE (Momentum).
Sientra, Inc. (HIS)
SIEN is a medical aesthetics company that develops and sells medical aesthetics products worldwide. The Company’s offerings include silicone gel breast implants, breast tissue expanders and scar management products. This has a 21.11% of the short float.
On July 6, SIEN announced that the United States Food and Drug Administration (FDA) had approved the Low Plus Profile Projection breast implant for breast augmentation in women 22 years of age or older and for women of all ages undergoing breast reconstruction. The product was expected to be available in the country at the end of July.
SIEN’s net cash used in operating activities increased 105% year over year to $30.96 million in the six months ended June 30. Net cash provided by financing activities was $4.99 million, down 85.5% from the same period a year earlier. Cash, cash equivalents and restricted cash balance decreased 69.4% from the prior year period to $25.29 million.
Street expects SIEN’s revenue to reach $22.19 million for the fiscal quarter ending September 2022.
SIEN stock is down 73.3% year-to-date to close its last trading session at $0.98. It gained 17.1% over the past month.
It’s no surprise that HIS has an overall D rating, which translates to Sell in our POWR rating system.
SIEN has a D rating for Growth, Momentum, Sentiment and Quality. It is ranked No. 104 out of 146 stocks in the Medical – Devices and Equipment industry. The industry is rated D.
To see additional POWR ratings for value and stability for HIS, Click here.
Lemonade, Inc. (LMND)
LMND operates as a provider of various insurance products in the United States and Europe. The Company’s insurance products include Stolen or Damaged Property and Personal Liability which protects customers if they are responsible for an accident or damage to another person or their property. He has a 27.16% short float.
On August 1, LMND announced the closing of its divestiture of Metromile’s Enterprise Business Solutions (EBS) to digital insurance platform EIS. The divestiture of Metromile’s recently acquired claims automation and fraud detection SaaS platform may not benefit the company.
For the fiscal second quarter ended June 30, LMND’s net loss increased 22.1% year-on-year to $67.90 million. Net loss per share attributable to common shareholders increased 22.2% from the prior year quarter to $1.10. Adjusted EBITDA decreased by 24.5% compared to the same period of the previous year to reach a negative amount of $50.30 million.
The consensus EPS estimate of negative EPS of $1.38 for the quarter ending September 2022 indicates a 27.8% year-over-year decrease.
The stock has fallen 57% over the past year to close its last trading session at $29.43. However, LMND is up 49.6% over the past month.
LMND has an overall F rating, which equates to a strong sell in our proprietary rating system. The stock has a value rating of F and a growth, stability and quality rating of D. Within 55 stocks Insurance – P&C industry, it is ranked #54.
Click here to see additional POWR ratings for Momentum and Sentiment for LMND.
Stoke Therapeutics, Inc. (STOCK)
STOK is an early-stage biopharmaceutical company developing novel antisense oligonucleotide (ASO) drugs to address the underlying causes of serious genetic diseases. Its leading clinical candidates are STK-001 and STK-002. STOK has a 14.68% float short.
For the fiscal second quarter ended June 30, STOK’s operating loss increased 14.6% year-on-year to $25.24 million. Net loss and net loss per share were $24.65 million and $0.63, up 12.2% and 5% from the prior year period.
Street’s fiscal 2023 revenue estimate of $10.37 million reflects a 5.5% decrease from the prior year.
The stock has gained 26.4% over the past month, but is down 20.5% year-to-date to close its last trading session at $19.08.
STOK’s overall D rating translates to Sell in our POWR rating system. It is ranked No. 217 out of 402 stocks in the biotechnologies industry. The industry is rated F.
In addition to the POWR ratings we have shown above, one can see the STOK ratings for Growth, Value, Stability and Sentiment. here.
WE shares were trading at $5.11 per share Thursday morning, down $0.14 (-2.67%). Year-to-date, WE is down -40.58%, compared to a -9.24% rise in the benchmark S&P 500 over 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. After…