The Fed launched its third straight 75 basis point hike last week, taking its key rate to three percentage points this year. Fed officials insisted on raising rates to combat decades-high inflation, even at the cost of a slowing economy. This lead to major benchmarks plummet noticeably last week.
Additionally, aggressive rate hikes, coupled with the UK tax cuts last week, pushed the US dollar higher. “Such strength in the US dollar has historically led to some sort of financial/economic crisis,” Morgan Stanley’s chief US equity strategist wrote. Michael Wilson. However, central bank officials have mastered the growing volatility of global markets and said their priority remained controlling domestic inflation.
We think fundamentally weak stocks, Las Vegas Sands Corp. (LVS), Roblox Corporation (RBLX), Carnival Corporation & plc (CCA), Marathon Digital Holdings, Inc. (MARA) and ContextLogic Inc. (TO WISH) might be best avoided during this bear market.
Las Vegas Sands Corp. (LVS)
LVS and its subsidiaries develop, own and operate integrated resorts in Asia and the United States. Its properties include Marina Bay Sands, Venetian Macao, Plaza, Four Seasons Hotel Macao, Londoner Macao, Parisian Macao and Sands Macao.
LVS’s net revenue decreased 10.9% year-over-year to $1.05 billion for the fiscal quarter ended June 30, 2022. Its operating loss increased 5.8% from year-on-year to $147 million, while its net loss was $290 million, up 51% year-on-year. Additionally, the company’s EPS increased 52% from the prior year quarter to $0.38.
Analysts expect LVS EPS to remain negative in 2022. Additionally, it has missed EPS estimates in three of the previous four quarters.
In terms of Price/Book futures, LVS is currently trading at 7.57x, 232% higher than the industry average of 2.28x. Its forward-looking EV/EBITDA multiple of 40.51 is 387.8% higher than the industry average of 8.30.
Over the past nine months, the stock has lost 8.1% to close the last trading session at $39.66.
LVS’ POWR Rankings fit into these gloomy prospects. The stock has an overall rating of D, which translates to a 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 an F rating for value and a D for stability. LVS is ranked #22 out of 27 D-rated stocks Entertainment – Casinos/Gambling industry.
We also rated LVS for growth, momentum, sentiment, and quality. Click here to access all LVS classifications.
Roblox Company (RBLX)
RBLX operates as a developer and operator of an online entertainment platform. Its offerings include Roblox Studio, Roblox Client, Roblox Education, and Roblox Cloud. The company serves customers in the United States, United Kingdom, Canada, Europe, China, Asia-Pacific and internationally.
RBLX operating loss rose 19.1% from its value a year ago to $170.27 million in the fiscal second quarter ended June 30. The company’s net loss attributable to common shareholders increased 25.9% from the same period last year to $176.44 million. Net loss per share attributable to common shareholders increased 20% year over year to $0.30.
Street expects RBLX EPS to be negative $0.31 for the fiscal third quarter ending September 2022, indicating a decline of 136.1% from the prior year period. Consensus revenue is estimated at $681.04 million for the same quarter.
In terms of futures price/sales, RBLX is currently trading at 7.77x, 620.4% higher than the industry average of 1.08x. Its forward-looking EV/EBITDA multiple of 64.74 is 766% higher than the industry average of 7.48.
Shares of RBLX are down 65.6% year-to-date to close its last trading session at $35.55. It has fallen 65.1% over the past nine months.
RBLX’s overall F rating translates to a strong sell in our POWR rating system. The stock also has an F rating for stability and a D for growth, value, momentum and sentiment. He is ranked last in the 22-stock Entertainment – Toys and Video Games industry.
To see additional POWR ratings for quality for RBLX, Click here.
Carnival Corporation & plc (CCA)
CCL operates as a leisure travel company in the United States and internationally. Its ships call under the Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (UK) and Cunard brands. The company also provides port destinations and other services, as well as owns and operates hotels, lodges, glass dome cars and coaches.
Last month, CCL’s Princess Cruises canceled 11 sailings aboard the Diamond Princess due to staffing issues that have been a constant in the cruise industry this year. According to the company, the brand faced “labour challenges” as travelers returned in droves for cruises and its ships resumed sailing with increased occupancy.
For the second quarter ended May 31, 2022, CCL’s operating loss was $1.47 billion. The company reported a net loss of $1.83 billion, while its loss per share was $1.61.
CCL’s EPS is expected to reach negative $0.29 in the quarter ending November 2022.
CCL’s forward price/sales multiple of 0.82 is 6.3% above the industry average of 0.77. In terms of EV/Futures, the stock is trading at 2.98x, 190% higher than the industry average of 1.03x.
The stock is down 63.8% over the past year and 55.5% year-to-date to close the last trading session at $8.90.
CCL’s weak fundamentals are reflected in its POWR ratings. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system. CCL also has an F rating for stability and sentiment and a D for value and quality. In category F Travel – Cruises industry, it is ranked #2 out of 4 stocks.
In addition to the POWR ratings we’ve shown above, you can see CCL ratings for Growth and Momentum here.
Marathon Digital Holdings, Inc. (MARA)
MARA, a digital asset technology company, operates cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets in the United States.
MARA’s revenue decreased 15% year-over-year to $24.92 million for the second quarter ended June 30, 2022. Its operating loss increased 61.6% year-over-year to $178.21 millions of dollars. The company’s net loss rose 76% year over year to $191.65 million. Additionally, its loss per share was $1.75, up 60.5% from the year-ago quarter.
Analysts expect MARA’s loss per share for the current quarter to increase 33.1% year-over-year to $0.29. Its revenue is expected to decline 46.1% year over year to $27.85 million over the same period. It also fell short of consensus EPS estimates in three of the last four quarters.
MARA’s forecast EV/EBITDA multiple of 31.60 is 175.2% higher than the industry average of 11.48. In terms of EV/Futures, the stock is trading at 10.22x, 325.9% higher than the industry average of 2.40x.
Over the past year, the stock has fallen 74.9% to close the last trading session at $9.61. It has fallen 30.9% over the past month.
It’s no surprise that MARA has an overall rating of F, which translates to a strong sell in our proprietary rating system. The stock also has an F rating for growth, value, stability, sentiment and quality. It belongs to Financial Services (Corporate) industry.
To see MARA’s rating for Momentum, Click here.
ContextLogic Inc. (TO WISH)
WISH, an e-commerce company operates an e-commerce platform that connects users to merchants in Europe, North America, South America and internationally. The company also provides market and logistics services to its traders.
WISH’s revenue decreased 79.6% year-on-year to $134 million in the second quarter ended June 30, 2022. Its gross profit decreased 89.1% from the prior year quarter to 42 millions of dollars. The company reported an operating loss of $91 million, while its net loss was $90 million. Additionally, its cash and cash equivalents were $693 million, down 31.3% for the six months ended June 30, 2022.
The negative EPS consensus estimate of $0.17 points to a 220.8% year-over-year decline in the current quarter ending September 2022. Additionally, the consensus revenue estimate of 155.98 million represents a 57.6% year-over-year decline over the same period.
In terms of futures price/sales, WISH is currently trading at 0.82x, 6% higher than the industry average of 0.77x.
Shares of the company have fallen 86.5% over the past year and 73.3% since the start of the year to close its last trading session at $0.88.
WISH’s weak outlook is reflected in its POWR ratings. The stock has an overall rating of D, which is equivalent to Sell in our proprietary rating system. WISH has an F rating for stability and a D for quality. Of the 64 shares listed F the Internet industry, WISH is ranked #54.
Beyond what is shown above, you can view WISH Ratings for Growth, Momentum, Value and Sentiment here.
LVS shares were trading at $39.86 per share on Tuesday morning, up $0.20 (+0.50%). Year-to-date, LVS has gained 5.90%, versus a -21.59% rise in the benchmark S&P 500 over the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue her career in investment research. Its fundamental approach to stock analysis helps investors identify the best investment opportunities. After…