The stock market is off to a washing machine kind of start for 2024, with gains and lulls that keep investors guessing. In this type of market, it’s equally important to identify not only the best stocks to buy, but F-rated stock picks to avoid a summer slump.
The benchmark Dow Jones Industrial Average is up only 3% in 2024, while the Nasdaq composite and the S&P 500 are both doing better with 8% gains. So, there are plenty of stocks to choose from that would be solid picks for your portfolio.
However, weakness in electric vehicles and some consumer sectors continue to plague the market. Meme stocks are wildly unpredictable but often lead to more pain than gain.
The Portfolio Grader rates all stocks in the market on an “A” through “F” scale to help determine the best stocks to buy and the key stock picks to avoid.
By evaluating stocks based on earnings performance, growth, momentum and analyst sentiment, the Portfolio Grader allows you to quickly identify which stocks could create the most pain for your portfolio.
These names are all F-rated stock picks to avoid this month.
Lucid Group (LCID)
Lucid Group (NASDAQ:LCID) is a struggling electric vehicle manufacturer that was once seen to be a potential rival for Tesla (NASDAQ:TSLA). But it hasn’t worked out that way.
Tesla is among the EV companies that are in a slump right now, as Tesla slashed the prices of its vehicles to make them more appealing to customers, but at the same time greatly reduced its profit margin and slowed profit growth.
And Lucid hasn’t been able to scale its business to be anything more than an afterthought in the EV world, delivering only 6,001 vehicles in all of 2023. Its velocity increased only slightly in the first quarter, when the company manufactured 1,728 vehicles and delivered 1,967.
Revenue for the first quarter was $172.7 million, up from $149.4 million a year ago. But the company also lost $729 million in the quarter, which was similar to its $772 million loss in the first quarter of 2023.
The company is making an effort — it secured an agreement with the Ayar Third Investment Company, which is an affiliate of Saudi Arabia’s Public Investment Fund, which is buying $1 billion in Lucid Group preferred shares.
It also has a new partnership with the King Abdulaziz City for Science and Technology, which is a Saudi Arabian-based government organization that will work with Lucid on projects.
But it’s not enough to move the needle — especially as Lucid continues to post massive quarterly losses. LCID stock is down 36% in 2024 and gets an “F” rating in the Portfolio Grader.
AMC Entertainment Holdings (AMC)
AMC Entertainment Holdings (NYSE:AMC) operates a chain of 900 movie theaters that provide a total of 10,000 screens.
Meme stocks are essentially companies that are popular with retail investors and pushed by users on various social media platforms. Often meme stocks can be subject to short squeezes if a group of retail investors believe that hedge funds are trying to short a stock.
But the problem with many meme stocks is that the fundamentals and performance of the company doesn’t match the valuation, and that’s where AMC comes in.
AMC has its supporters, despite a tough 2023 that saw a writers’ strike in Hollywood that stopped production, as well as the continued rise in streaming services that make watching movies at home more appealing.
Revenue in the first quarter was $951.4 million, down slightly from $954.4 million in the first quarter of 2023.
The company also reported a net loss of $163.5 million and 62 cents per share, which was an improvement from a loss of $235.5 million and $1.71 per share in the same quarter last year.
At best, AMC is a stagnant business. The stock is down 47% this year and gets an “F” rating in the Portfolio Grader.
Plug Power (PLUG)
Plug Power (NASDAQ:PLUG) is a play on clean energy. The company makes a battery that uses hydrogen and oxygen to produce electricity. The only byproduct is water vapor.
While Plug Power’s battery is theoretically appealing for businesses and communities that want to lower their carbon footprints, the reality for investors is that Plug Power hasn’t been able to make the business profitable.
Those losses continued in the first quarter of 2024, in which Plug Power reported revenue of $68.2 million, down from $182 million a year ago. Losses grew to $159 million from $69.3 million in the first quarter of 2023.
PLUG stock continues to lose ground. The stock is down 47% this year and gets an “F” rating in the Portfolio Grader.
GameStop (GME)
The second and most infamous of the meme stocks on this list is GameStop (NYSE:GME).
Hedge funds famously shorted the retailer in 2021, but retail investors rescued the company with a memorable short squeeze.
The whole episode was the subject of a film, Dumb Money, in 2023. While the short squeeze is long over, GameStop carries on, giving back all the gains that it earned during those heady but illogical times.
Revenue for the fourth quarter were $1.794 billion, down from $2.226 billion in the same quarter of 2022. Net income was up slightly, from $48.2 million to $63.1 million.
GameStop stock is wildly unpredictable. Retail investors pushed the stock price up 50% last month for unspecified reasons, but the company is already starting to give back the gains. GME stock is still down 9% for the year and was down 42% before its most recent rally.
I expect it to return to its moribund ways. GME stock gets an “F” rating in the Portfolio Grader.
Chegg (CHGG)
Chegg (NYSE:CHGG) is a California company that offers help to students, including homework assistance, textbook rentals (both physical copies and digitally) and online tutoring.
But Chegg is facing some critical problems right now due to the rise of artificial intelligence, which is progressing to the point that free generative AI platforms are able to help students — and even do the work for them — for free.
“We question if Chegg can build an AI experience that is meaningfully better than free alternatives that students will be willing to pay for […] Chegg has historically always beaten free competitors in the marketplace, but we believe the AI wave presents a truly credible free product experience to Chegg’s paid subscription,” Jefferies analyst Brent Thill wrote in a research note.
Chegg is also making some changes at the top of its org chart, with Nathan Schultz taking over as CEO to succeed Dan Rosenweig, who is now executive chairman of the board of directors.
Revenue in the first quarter was $174.4 million, down 7% from a year ago. Subscription services fell 9% to $154.1 million.
CHGG stock is down 56% this year, including 31% in the last month. It gets an “F” rating in the Portfolio Grader.
Starbucks (SBUX)
There are a lot of people who can’t get through the day without a cup of coffee — or a whole pot. And Starbucks (NASDAQ:SBUX) changed the industry when the Seattle-based coffeehouse swept across the country in the 1990s.
But after Starbucks posted a revenue and EPS miss in the second quarter of fiscal 2024, is it fair to wonder if people are getting tired of high-priced coffee drinks?
Comparable store sales fell by 3% in the U.S. and North America, and by 6% in international locations in the quarter. Overall, Starbucks reported revenue of $8.53 billion, down nearly 2% from a year ago.
A major challenge for Starbucks is its ambitions in China. Luckin Coffee (OTCMTKS:LKNCY) passed Starbucks as the top coffeehouse in China last year and maintains an aggressive pricing plan that undercuts Starbucks.
Not surprisingly, Starbucks stock is down 23% this year with most of those losses coming after the company’s Q2 earnings report. Starbucks has its work cut out for it, and there’s no need for investors to hold on while hoping for a turnaround.
SBUX stock gets an “F” rating in the Portfolio Grader.
Pfizer (PFE)
It may be fair to say that Pfizer (NYSE:PFE) is a victim of its own success. The company was wildly successful in the last few years as it was one of the first to create and market a COVID-19 vaccine.
That success brought in billions of dollars in revenue.
But because people aren’t getting vaccinated against Covid-19 as often as they were a year or two ago, Pfizer is facing some extremely challenging comparable numbers as it reports earnings.
Revenue in the first quarter was $14.8 billion, down from $18.4 billion a year ago. Pfizer reported income of $4.6 billion and 82 cents per share, but that wasn’t as good as a year ago when it reported $7 billion in income and $1.23 per share.
Pfizer issued full-year guidance for revenue between $58.5 billion and $61.5 billion, and adjusted EPS of $2.15 to $2.35. Pfizer says that it expects to get $8 billion in combined revenue this year from its Covid-19 vaccinations, with the majority of that coming in the second half of the year.
PFE stock is one to watch for a turnaround, but we aren’t there yet. The stock is down 2% in 2024 and gets an “F” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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