Market volatility is rife ahead of the central bank’s upcoming rate hike. The Fed is likely to hike rates three-quarters of a point this month. Moreover, the CBOE Volatility Index gained 40.1% year-to-date, indicative of the market turbulence. According to a Bloomberg survey of economists, the median probability of a recession over the next 12 months is 47.5%.
In addition, the personal savings rate has hit rock bottom in the United States. According to the Bureau of Economic Analysis, the personal savings rate hit 4.4% in April, the lowest since 2008, while a survey shows 58% of Americans now feel uncomfortable with the amount of emergency savings they have. This could lead to a possible decline in consumption and demand.
Given the widespread uncertainties, we think fundamentally weak stocks Nextdoor Holdings, Inc. (KIND), Warby Parker Inc. (WRBY), Wolfspeed, Inc. (WOLF), and Denison Mines Corp. (DNN) could be best avoided now.
Nextdoor Holdings, Inc. (KIND)
KIND operates as the neighborhood network that connects neighbors, businesses, and public services in the United States and internationally. It enables small and mid-sized businesses, large brands, public agencies, and nonprofits to receive information, give and get help, and build connections.
KIND’s revenue came in at $51 million for the first quarter ended March 31, 2022, up 48.3% year-over-year. However, its net loss increased 31.1% year-over-year to $32.95 million. Also, its negative adjusted EBITDA came in at $19.94 million, compared to a negative $16.85 million in the year-ago period.
KIND’s EPS is expected to remain negative in 2022 and 2023. Over the past year, the stock has lost 67.4% to close the last trading session at $3.43.
KIND’s POWR Ratings reflect its poor prospects. It has an overall grade of F, which indicates a Strong Sell. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an F grade for Stability and a D grade for Value and Momentum. Click here to access the additional POWR Ratings for KIND (Growth, Sentiment, and Quality). KIND is ranked #61 out of 65 stocks in the F-rated Internet industry.
Warby Parker Inc. (WRBY)
WRBY provides eyewear products. It offers eyeglasses, sunglasses, light-responsive lenses, blue-light-filtering lenses, and contact lenses, as well as accessories. The company runs 160 retail stores in the United States and Canada.
Goldman Sachs Group cut WRBY from Buy to Neutral and slashed their target price.
WRBY’s net revenue came in at $153.22 million for the first quarter ended March 31, 2022, up 10.3% year-over-year. However, its net loss came in at $34.13 million, compared to a net income of $3.01 million in the prior-year period. Moreover, its loss per share increased 900% year-over-year to $0.30.
Analysts expect the company's EPS to come in at a negative $0.02 in its about to be reported quarter ended June 2022. The stock has declined 73.2% year-to-date to close the last trading session at $12.50.
WRBY has an overall F grade, equating to a Strong Sell in our POWR Ratings system. Also, it has an F grade for Sentiment and a D for Value, Stability, and Quality.
Click here to access the WRBY rating for Growth and Momentum. It is ranked #138 out of 148 stocks in the D-rated Medical - Devices & Equipment industry.
Wolfspeed, Inc. (WOLF)
WOLF provides silicon carbide and gallium nitride (GaN) materials, power devices, and radio frequency (RF) devices based on wide bandgap semiconductor materials and silicon. It serves customers in North America, Asia, and Europe.
For the third quarter ended March 27, 2022, WOLF’s net revenue came in at $188 million, up 36.9% year-over-year. However, its operating loss increased marginally year-over-year to $62.30 million. In addition, its total operating expense came in at $126.30 million, up 19.8% year-over-year.
WOLF’s EPS is expected to remain negative in 2022. Moreover, its EPS is expected to decrease 33.6% per annum for the next five years. WOLF has lost 28.3% year-to-date to close the last trading session at $80.17.
WOLF’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system. In addition, the stock has an F grade for Value and Quality and a D for Stability and Sentiment.
We also have graded WOLF for Growth and Momentum. Click here to access all of WOLF’s ratings. It is ranked #90 out of 94 stocks in the Semiconductor & Wireless Chip industry.
Denison Mines Corp. (DNN)
Headquartered in Toronto, Canada, DNN engages in the acquisition, exploration, development, extraction, processing, selling of, and investing in uranium properties in Canada.
DNN’s revenues came in at C$4.13 million ($3.19 million) for the first quarter ended March 31, 2022, up 65.3% year-over-year. However, its cash and cash equivalents came in at C$65.29 million ($50.58 million), down 62.2% year-over-year. Its net cash used in operating activities came in at C$3.47 million ($2.69 million), up 74.9% year-over-year.
DNN’s revenue is expected to decrease by 41.3% year-over-year to $9.09 million in 2022. Its EPS is expected to decrease by 50% year-over-year to $0.01 in 2022. In addition, its EPS is estimated to decline 400% year-over-year to negative $0.03 in 2023. The stock has lost 39.3% over the past nine months to close the last trading session at $1.19.
DNN has an overall F grade, translating to Strong Sell in our proprietary rating system. Also, the stock has an F grade for Value and a D for Growth and Stability.
Click here to access the additional POWR Ratings for DNN (Momentum, Sentiment, and Quality). It is ranked #41 out of 43 stocks in the F-rated Miners – Diversified industry.
KIND shares were trading at $3.52 per share on Thursday morning, up $0.09 (+2.62%). Year-to-date, KIND has declined -55.39%, versus a -16.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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