Three Stocks to Avoid for Now

Seeking out great stocks to buy is essential, beyond a doubt, but many would say it’s more important to know what to avoid or get rid of because a losing stock can cost you.  That’s why to get the absolute best possible performance out of your portfolio; you’ve got to be prepared to trim back the deadwood.  

Being on the wrong side of a moving stock can eat away at those ever-important long-term returns, so it’s important to keep your eyes out for potential losing stocks along with the winners. Even the best gardens need pruning, and our team has spotted a few stocks that seem like prime candidates for selling or avoiding.  

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A series of near-term setbacks could delay Virgin Galactic’s (SPCE) final scheduled test flight, pushing it out past the third quarter of 2022.  An ongoing FAA investigation into Sir Richard Branson’s July 11th flight and the subsequent delay of a planned mission due to a manufacturing defect in one of Virgin’s spaceplane parts threaten to throw a wrench into Virgin’s timeline.  This means SPCE investors may have to wait even longer to determine if Virgin Galactic can conduct the business profitably.  

Over the past few months, SPCE has achieved operational success, but its progress is not yet reflected in its financials.  SPCE’s operating loss increased 17.2% year-over-year to $73.90 million in the fiscal second quarter, which ended June 30.  Its loss before income taxes grew 30.7% from the year-ago value to $94.03 million.  The company’s net loss per share increased 14.7% year-over-year to $0.39. Also, SPCE’s net cash used in operating activities increased 5% from the same period last year to $113.47 million in the six months ended June 30.

The analyst community expects the company’s EPS to decline 20% from the prior year to a negative $1.50 in the current year.  In addition, the company’s EPS is expected to remain negative at least until next year.

SPCE’s EPS is expected to decline 60.6% per annum over the next five years.  Furthermore, the stock missed the consensus EPS estimates in three out of the trailing four quarters.

With burgeoning competition in the space industry, with Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX making significant progress of late, SPCE might lose its first-mover advantage if it fails to address its inefficiencies.

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Blackberry (BB) stock has been a rollercoaster in 2021, thanks to the company’s meme stock status.  An insane spike in January sent the share price rocketing more than 200%, from less than $8 a share to more than $28 a share in less than 2 weeks.  After an embarrassing security scare (and attempted cover-up), BB settled at a price around $10, which is considerably less than its $25.10 close from January 27th.  

In terms of forward EV/EBITDA, BB is currently trading at 285.29, which is 1,560.9% higher than the 17.18 industry average. Its 9.33 forward Price/Sales multiple is 128.5% higher than the 4.09 industry average.

BB’s revenue declined 15.5% year-over-year to $174 million in its fiscal first quarter, which ended May 31. Its operating loss stood at $58 million, while its net loss and loss per share came in at $62 million and $0.11, respectively.

Analysts expect BB’s revenues to decline 14.6% year-over-year to $785.14 million in the current year. The company’s EPS is expected to remain negative until at least 2023.

The company is scheduled to report Q2 FY22 earnings on September 22.

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Gold is in a strange moment in its history, and it has everything to do with cryptos.  Wall Street is providing as much exposure to cryptocurrency demand as investors can handle.  Cryptos are now the preferred alternative investment over gold.  

Gold has been trading in range for a while now, and gold producers have gotten stuck as well.  The pandemic has slowed operations and demand, and now the delta wave threatens to further impede gold demand and production.  

This could all change at some point if the markets ever correct.  But for now, gold has taken the back burner, and gold miners are not faring well.

Canada-based Alamos Gold Inc. (AGI) made it to our stocks to sell or avoid the list because currently, it isn’t attracting buyers, and gold prices aren’t going anywhere.  AGI has lost nearly 13% in the past 3 months and 22% in the past year.  

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