Finding stable companies in a market downturn is vital to an investment portfolio. With Federal Reserve rates climbing to their highest levels since 2007 and the recent banking crisis, safe and robust companies are critical.
These three companies have stocks to avoid based on their recent earnings misses and the overall economic outlook.
Bed Bath & Beyond (BBBY)
Bed Bath & Beyond (NASDAQ:BBBY), a home goods retailer, has seen significant volatility in recent years. The stock rose to over $35 per share in early 2021 due to a short squeeze causing stocks like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) to skyrocket in share price. And now, two years later, Bed Bath & Beyond is below $1 per share and is one of the most heavily shorted stocks in the market. In addition, with the delayed quarterly report for the company, net loss grew by over 40%, and negative EPS compounded by over 50%.
The company is staving off bankruptcy by raising capital from selling its preferred stock and warrants. But, unfortunately, this action may prolong its inevitable bankruptcy. It also needs help to keep up with other retailers like Walmart (NYSE:WMT) and Target (NYSE:TGT) in selling similar products. And this will probably just get worse with Bed Bath continuing to close retail locations.
Kohl’s (NYSE:KSS) is an omnichannel retailer that, similar to other companies, has struggled to keep up with much larger retailers and online sales from companies like Amazon (NASDAQ:AMZN). In February, Kohl’s named a new CEO and COO. This could be a good or bad situation based upon the direction new management takes the company.
Kohl’s stock has dropped by over 65% in the last year alone, with a net loss in Q4 2022 of $273 million compared to Q4 2021, which was a net gain of $299 million.
Retailers have struggled with decreased consumer spending due to inflation and Fed rate hikes. The company is in an interesting spot with its stock price tumbling and a growing deficit in net income. It will be interesting to see if anything changes for Kohl’s with the new management taking over.
Intel (NASDAQ:INTC), a chipmaker, has fallen by almost 35% in the last year. Following its most recent earnings release, the company reduced its dividend from $1.46 to 50 cents annually for capital allocation.
From its disappointing Q4 earnings release, the company’s net income in 2022 was $8 billion, half of what it was in 2021. Intel and other semiconductor and PC makers saw a significant boost in sales in 2020 and 2021 due to the global pandemic and many people staying indoors. But now, that boost in sales is fizzling out in 2022. Intel has competed for market share with its rival companies and tried to become profitable with less consumer interest in high-priced computer products.
On the date of publication, Noah Bolton did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.