The Federal Reserve is facing a challenging situation as they try to tackle both inflation and a potential financial crisis resulting from the collapse of several banks. Moreover, the stock market plunged on the latest interest rate hike.
Given the lingering uncertainties, I think bargain hunters might want to hold off on weak stocks Mullen Automotive, Inc. (MULN), Bed Bath & Beyond Inc. (BBBY), and Vinco Ventures, Inc. (BBIG), which are not reasonably priced.
The Federal Reserve raised interest rates by a quarter point yesterday as it attempts to fight stubbornly high inflation while addressing risks to financial stability. Following the rate hike, the stock market tumbled down, with the benchmark S&P 500 closing down 1.7% after swinging between gains and losses, while the Nasdaq Composite lost 1.6%.
Moreover, Federal Reserve Chairman Jerome Powell has warned that stress in the banking industry could lead to a credit crunch, which would have significant economic implications. This comes as Fed officials project a further economic slowdown beyond what was previously expected.
Also, as inflation remains well above the Fed's target, policymakers are unlikely to cut rates this year.
Furthermore, following the rate hike, Wells Fargo Securities’ Michael Schumacher said in an interview that policymakers are underestimating how quickly tightening credit conditions could hurt the economy.
According to Man Group CEO Luke Ellis, more pain is headed for stocks as turmoil in the banking sector hasn't passed. Ellis said the chaos in the banking system could last another two years, and smaller regional banks are at a higher risk of closing down.
Here is a detailed discussion on the stocks mentioned above:
Mullen Automotive, Inc. (MULN)
Electric vehicle company MULN manufactures and distributes electric vehicles. Its products include electric passenger and commercial vehicles, and it provides solid-state polymer battery technology.
MULN’s trailing-12-month ROTC and ROTA of negative 144.39% and 217.65% are remarkably lower than the industry averages of 6.30% and 3.84%.
MULN’s loss from operations rose 423.7% year-over-year to $73.62 million for the quarter that ended December 31, 2022. Its net loss increased 141.5% year-over-year to $376.91 million, while net loss per share came in at $0.28.
Shares of MULN have lost 98.5% over the past year and 54.1% over the past month to close the last trading session at $0.12. It has a 24-month beta of 2.97.
MULN’s POWR Ratings reflect its grim 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.
It has an F grade for Value and Stability and a D for Sentiment and Quality. Among the 64 stocks in the D-rated Auto & Vehicle Manufacturers industry, it is ranked #57.
To access the additional POWR Ratings for MULN for Growth and Momentum, click here.
Bed Bath & Beyond Inc. (BBBY)
BBBY operates a retail store chain. The company sells domestic merchandise, bath items, kitchen textiles, and home furnishings. It sells its offering through various websites and applications.
BBBY’s trailing-12-month gross profit margin of 26.14% is 25.3% lower than the industry average of 34.99%. Its trailing-12-month net income margin is negative 20.54%, compared to the 4.56% industry average. Moreover, its trailing-12-month EBIT margin of negative 14.85% compares to the 7.70% industry average.
BBBY’s net sales declined 33% year-over-year to $1.26 billion for the third quarter that ended November 26, 2022. Its adjusted gross profit decreased 57.4% year-over-year to $287.42 million. The company’s adjusted net loss increased significantly from the prior-year quarter to $331.23 million and $3.65 per share.
Analysts expect BBBY’s EPS for the fiscal year that ended February 2023 to decline 961.8% year-over-year to $11.47. Its revenue for the same year is expected to decline 29.1% year-over-year to $5.58 billion. It failed to surpass consensus EPS and revenue estimates in each of the trailing four quarters, which is disappointing.
Over the past year, the stock has declined 96.6% to close the trading session at $0.80. It has fallen 50.5% over the past month. BBBY has a 24-month beta of 2.88.
BBBY’s weak prospects are reflected in its POWR Ratings. The stock has an overall rating of F, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Stability and Sentiment and a D for Quality and Momentum. It is ranked #55 in the 56-stock Home Improvement & Goods industry.
Click here to see the other ratings of BBBY for Growth and Value.
Vinco Ventures, Inc. (BBIG)
BBIG commercializes and develops end-to-end products like kitchenware, toys, baby products, pet care, health and beauty aids, small appliances, entertainment venue merchandise, and housewares.
BBIG’s trailing-12-month gross profit margin of 2.75% is 94.5% lower than the industry average of 49.63%. Its trailing-12-month asset turnover ratio of 0.09x is 80.6% lower than the 0.47x industry average.
BBIG’s gross profit declined 257.8% year-over-year to negative $581.07 thousand in the second quarter that ended June 30, 2022. Its operating expenses rose 476.6% year-over-year to $31.19 million, while operating loss rose 530.2% year-over-year to $31.77 million.
The stock has declined 83.9% over the past year and 62.5% over the past six months to close the last trading session at $0.34. It has a 24-month beta of 1.04.
BBIG’s bleak prospects are reflected in its POWR Ratings. The stock’s overall F rating equates to a Strong Sell in our proprietary rating system.
The stock also has an F grade for Stability, Value, and Quality and a D for Momentum and Sentiment. It is ranked last among 56 stocks in the D-rated Consumer Goods industry.
To see BBIG’s additional POWR Ratings for Growth, click here.
Consider This Before Placing Your Next Trade…
We are still in the midst of a bear market.
Yes, some special stocks may go up like the ones discussed in this article. But most will tumble as the bear market claws ever lower this year.
That is why you need to discover the “REVISED: 2023 Stock Market Outlook” that was just created by 40 year investment veteran Steve Reitmeister. There he explains:
- 5 Warnings Signs the Bear Returns Starting Now!
- Banking Crisis Concerns Another Nail in the Coffin
- How Low Will Stocks Go?
- 7 Timely Trades to Profit on the Way Down
- Plan to Bottom Fish For Next Bull Market
- 2 Trades with 100%+ Upside Potential as New Bull Emerges
- And Much More!
You owe it to yourself to watch this timely presentation before placing your next trade.
REVISED: 2023 Stock Market Outlook >
MULN shares fell $0.12 (-100.00%) in premarket trading Thursday. Year-to-date, MULN has declined -58.04%, versus a 2.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.3 Stocks Bargain Hunters Might Want to Hold off on Right Now StockNews.com