The stock market is expected to remain under pressure due to the increased odds of a recession. The Consumer Price Index (CPI) index rose 9.1% year-over-year in June, hitting a new high in more than 40 years.
The red-hot inflation data is expected to make the Federal Reserve even more aggressive in raising the benchmark interest rates. The Fed officials have signaled lifting interest rates by 75 basis points in its meeting next week.
While the stock market has witnessed some relief rallies over the past few days on investors’ optimism over better-than-expected tech earnings, according to Fairlead Strategies’ Katie Stockton, the current market rally will likely fade, and investors should be prepared for the bear market to continue.
The technical analyst added that while the S&P 500 and Nasdaq reclaimed their 50-day moving averages, longer-term indicators are still in negative territory.
So, we think shares of fundamentally weak companies Plug Power Inc. (PLUG), Rivian Automotive, Inc. (RIVN), and Lucid Group, Inc. (LCID) are best avoided now. These stocks are rated “Strong Sell” in our proprietary rating system.
Plug Power Inc. (PLUG)
PLUG offers hydrogen fuel cell solutions for the power markets in North America and Europe. It is focused on proton exchange membrane (PEM) fuel cell technologies, green hydrogen generation, storage, and dispensing infrastructure. The company provides products such as GenDrive, GenFuel, GenCare, ProGen engines, GenSure, and GenKey.
On April 29, PLUG and Olin Corporation (OLN), a leading vertically integrated Chlor alkali producer and marketer, signed a memorandum of understanding (MOU) to create a joint venture (JV) to produce and market green hydrogen to support growing fuel cell demand. The JV is expected to be operational in 2023. So, it might take a while to realize gains from this strategic partnership.
In the fiscal 2022 first quarter ended March 31, 2022, PLUG’s operating expenses increased 187.5% year-over-year to $103.81 million. Its operating loss widened 188.2% year-over-year to $139.16 million. In addition, the company’s net loss and net loss per share came in at $156.90 million and $0.27, worsening 157.6% and 125% year-over-year, respectively.
Analysts expect PLUG’s loss per share to widen 12.2% from the prior-year period to $0.20 for the fiscal 2022 second quarter (ended June 2022). Furthermore, the consensus loss per share estimate for the current year (ending December 2022) is expected to come in at $0.78.
The stock has declined 36.4% year-to-date and 34.7% over the past year to close the last trading session at $18.32.
PLUG’s POWR Ratings are consistent with this bleak outlook. The company has an overall rating of F, which translates to Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PLUG has a grade of F for Quality and Stability. It has a grade of D for Growth, Value, and Sentiment. Within the Industrial – Equipment industry, it is ranked #90 of 91 stocks. To see PLUG’s POWR Rating for Momentum, click here.
Rivian Automotive, Inc. (RIVN)
RIVN designs, develops, manufactures, markets, and sells electric vehicles (EVs) and accessories in the United States. The company offers pickup trucks and sports utility vehicles. RIVN also provides Rivian Commercial Vehicle in collaboration with Amazon.com for an electric Delivery Van. It sells its products directly to customers in the consumer and commercial markets.
In the fiscal 2022 first quarter ended March 31, 2022, RIVN’s gross profit stood at negative $502 million. Its operating expenses increased 162.7% year-over-year to $1.08 billion. The company’s loss from operations widened 285.1% from the year-ago value to $1.58 billion.
In addition, RIVN’s net loss came in at $1.59 billion, worsening 284.8% year-over-year. Its net loss per share attributable to Class A and Class B common stockholders amounted to $1.77. As of March 31, 2022, its cash and cash equivalents stood at $16.43 million versus $18.13 million as of December 31, 2021.
Analysts expect RIVN’s loss per share for the fiscal 2022 second quarter (ended June 2022) and fiscal year 2022 (ending December 2022) to come in at $1.63 and $6.37, respectively. Also, Street expects the company’s EPS to decline 31.7% per annum over the next five years.
The stock has plunged 66.8% year-to-date and 66.1% over the past year to close the last trading session at $34.13.
RIVN’s POWR Ratings reflect this bleak outlook. The stock’s overall…
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