My "three stocks to avoid" column last week was a flop. The three stocks I thought were going to move lower for the week -- Rite Aid, MicroStrategy, and CVR Energy -- finished up 40%, up 23%, and flat, respectively, averaging out to a 21% gain.
The S&P 500 experienced a 6.4% surge, and the investments I figured would fare worse did a lot better. I was wrong, but I have still been correct in 24 of the past 36 weeks.
Where do I go to next? I see Micron Technology(NASDAQ: MU), Bed Bath & Beyond(NASDAQ: BBBY), and National Beverage(NASDAQ: FIZZ) as stocks you may want to consider steering clear of this week. Let's go over my near-term concerns with all three investments.
Micron Technology
Micron Technology is one of the few companies reporting fresh financials this week. The semiconductor bellwether reports its quarterly results after Thursday's market close. Micron's memory and storage solutions are found in everything from PCs to consumer electronics and automobiles, so it's easy to see why it would also be vulnerable to a global economic slowdown.
Analysts seem to have been paring back their expectations over the past month, and not just for this year but also for fiscal 2023. Micron Technology has an impressive history of beating Wall Street expectations on the bottom line. It's also refreshingly cheap, trading for seven times trailing earnings and six times this fiscal year's target. I still think its outlook may be cloudy if not cautionary when it reports, and that could rattle the shares. With more than half of its product portfolio geared to the consumer market, Micron is more vulnerable than you might think in this iffy economic climate.
Bed Bath & Beyond
There's a trend we've seen with retailers reporting over the past few weeks: Consumers are shifting their spending habits from home goods and general merchandise to experiences. The monetary migration doesn't bode well for Bed Bath & Beyond heading into its fiscal quarterly update on Wednesday morning.
One can argue that Bed Bath & Beyond already has a rough performance baked into the price. Did you know that the superstore chain is trading in the single digits? The stock enters this new trading week 84% below the highs it set in June of last year.
The downticks have been earned. Bed Bath & Beyond has fallen well short of analyst profit targets in each of its last four reports. Analysts see a sales decline this year, which would mark the fifth consecutive fiscal year where the top line goes the wrong way. It's at least two years away from a return to profitability, and retail isn't patient when concepts aren't clicking.
National Beverage
It's been a few years since National Beverage caught lightning in a bottle -- or a can, to be more accurate -- with its LaCroix line of flavored sparkling beverages. The beverage giant found a golden ticket as a way to offset a consumer shift away from traditional carbonated sodas, but now the market is crowded.
It might surprise you that it's been four years since National Beverage posted double-digit annual sales growth. The carbonated-beverage giant with FIZZ as its ticker symbol has gone flat. It's not fading away like Bed Bath & Beyond, but it's proving too mortal for its valuation. National Beverage has missed analyst earnings projections in back-to-back quarters. It's hard to justify paying 28 times earnings for a company in a cutthroat market that is seemingly locked into single-digit sales growth.
LaCroix isn't dead, but where is the other growth catalyst if its primary driver can't find a way to stand out again in its niche market? It's not as if Shasta sodas or Rip It energy drinks are setting the world on fire.
It's going to be a bumpy road for some of these investments. If you're looking for safe stocks, you aren't likely to find them in Micron Technology, Bed Bath & Beyond, and National Beverage this week.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool recommends National Beverage. The Motley Fool has a disclosure policy.
