The subsided recession fears based on robust economic data and better-than-expected corporate earnings helped the market recover last month. In addition, a massive spending package to curb inflation is driving positive sentiment in the market.
However, investors’ optimism over these factors is expected to be short-lived as a surprisingly strong jobs report could motivate the Fed to consider a higher interest rate hike in its next meeting. Moreover, rising tensions over Taiwan could keep the market highly volatile in the near term. So, fundamentally weak stocks could keep losing.
Given this backdrop, it could be wise to avoid beaten-down stocks Magnite, Inc. (MGNI) and Ranpak Holdings Corp. (PACK), which are not well-positioned to survive the market fluctuations.
Magnite, Inc. (MGNI)
MGNI operates an independent sell-side advertising platform internationally. It offers applications and services for sellers of digital advertising inventory or publishers to manage and monetize their inventory. It provides a range of tools for sellers to control their advertising business and protect the consumer viewing experience.
Also, it allows buyers, including advertisers, agencies, agency trading desks, and demand side platforms (DSPs), to buy digital advertising inventory and a transparent, independent marketplace that brings buyers and sellers together and facilitates intelligent decision-making and automated transaction execution at scale.
On July 27, 2022, MGNI’s SpringServe, the leading independent TV ad serving platform, announced a strategic integration with Atmosphere, a leading streaming TV service provider for businesses, to power its video-centric digital out-of-home (DOOH) inventory and ensure a superior quality ad experience for consumers. This should nurture MGNI’s long-term partnership with Atmosphere.
As of March 31, 2022, the company had $204.59 million in cash and cash equivalents, down 11.2% from the end of fiscal 2021. The stock has lost 46.7% year-to-date to close the last trading session at $9.32, down 72.8% from its 52-week high of $34.23.
MGNI’s POWR Ratings reflect this bleak outlook. The stock has an overall rating of D, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an F grade for Stability and a D for Sentiment. Click here to see the additional ratings for MGNI’s Growth, Value, Quality, and Momentum.
MGNI is ranked #16 of 19 stocks in the D-rated Advertising industry.
Ranpak Holdings Corp. (PACK)
PACK provides product protection solutions for e-commerce and industrial supply chains in North America, Europe, and Asia. It offers line automation products, protective packaging solutions, cushioning protective systems, and wrapping protective systems. It sells its products to end users primarily through a distributor network and directly to select end users.
On July 21, 2022, PACK announced the global launch of the Flap’it! solution, a highly efficient machine that automates the packing of a variety of small products and helps ensure protection and significantly reduce costs, damage, and product returns.
Making great progress towards sustainable automated packaging solutions, the Flap’it! solution is ideal for e-commerce and logistics operations and for B2B operations shipping smaller spare parts and must witness high demand.
PACK’s gross profit for its fiscal 2022 second quarter ended June 30, 2022, decreased 5% year-over-year to $29.70 million. The company’s non-GAAP loss from operations came in at $11.60 million, compared to a $0.80 million income from operations in the prior-year period.
Its non-GAAP net loss came in at $11.60 million for the quarter, up 127.5% from the year-ago period. PACK’s loss per share came in at $0.14, representing a 100% rise from the year-ago period. As of June 30, 2022, the company had $59.20 million in cash and cash equivalents, down 43% from the end of fiscal 2021.
The consensus EPS estimate is negative for fiscal 2022 ending December 31, 2022. Analysts expect the revenue to be $347.81 million, indicating a 9.4% decline from the year-ago period. The stock has lost 85.4% year-to-date to close the last trading session at $36.81, down 87.3% from its 52-week high of $42.97.
PACK’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, which equates to a Sell in our proprietary rating system.
PACK has an F grade for Growth and Sentiment and a D for Quality. Click here to see additional ratings for PACK’s Value, Stability, and Momentum.
PACK is ranked #73 of 79 stocks in the B-rated Industrial - Machinery industry.
MGNI shares fell $0.02 (-0.21%) in premarket trading Tuesday. Year-to-date, MGNI has declined -46.86%, versus a -12.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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