My "three stocks to avoid" column last week was a mixed bag. The three stocks I thought were going to move lower for the week -- GameStop, ChargePoint, and Conn's -- finished down 3%, up 8%, and down 17%, respectively, averaging out to a 4% decline.
The S&P 500 experienced a 1.2% slide, and the investments I figured would fare worse did lose to the market. I was right. I have been correct in 23 of the past 33 weeks.
I see Hooker Furnishings(NASDAQ: HOFT), Stitch Fix(NASDAQ: SFIX), and ChargePoint(NYSE: CHPT) as stocks you may want to consider steering clear of this week. Let's go over my near-term concerns with all three investments.
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Hooker Furnishings
There are a few things working against Hooker Furnishings these days. With folks spending less time at home, and the housing market showing signs of cooling off, there's less demand for furniture. Hooker Furnishing's domestic upholstery business is holding up, but it's experiencing supply chain constraints with its imported casegoods. Retailers have been telling us that consumers are shifting their spending from merchandise to experiences, and that's problematic for a company like Hooker Furnishings.
Incoming orders are healthy, and its backlog of orders is at a historic high. The rub with the good news is that we don't know when Hooker Furnishings will be able to capitalize on the situation. It has fallen short of Wall Street's profit targets in each of the past three quarters, and it's worse than that. Hooker Furnishings has posted deficits in back-to-back quarters when the market was holding out for a small profit.
Hooker Furnishings reports again on Thursday morning. Analysts have been whittling down earnings expectations in recent weeks. Those same Wall Street pros see flattish sales growth in fiscal 2023 and fiscal 2024. A turnaround may happen at some point, but it doesn't seem to be taking place this week with what could be its fourth straight miss on the bottom line.
Stitch Fix
The Stitch Fix model has always made sense on paper. Most of us can use some help to dress better, staying in step with with changing fashion trends. Stitch Fix is there, providing wardrobe updates -- "fixes" -- to keep clients on the fresh side of looks. Reality hasn't been as kind.
Revenue growth has decelerated sharply for three consecutive quarters, and when Stitch Fix reports fresh financials this week analysts see a year-over-year decline. If it plays out that way it will be the only time -- outside of the quarter when the country shut down two years ago for the pandemic -- that Stitch Fix delivers negative year-over-year top-line growth.
Something is not clicking at Stitch Fix, and it's not as if time is on its side. Wall Street doesn't see an annual profit at Stitch Fix until 2026, and with its stock down in the single digits it doesn't exactly have a hungry audience for secondary offerings. With a potentially rough report shortly after Thursday's close, Stitch Fix has a lot to prove this week.
ChargePoint
It's fair to say that ChargePoint was the stock I got wrong last week. It was the one that moved higher. It's not as if the growing provider of charging stations for electric cars had a monster report. It was actually pretty troublesome. Revenue clocked in ahead of expectations, but its guidance for the current quarter and the midpoint of its outlook for the entire fiscal year were less than the market's top-line projections. ChargePoint also posted a larger loss than expected for the third straight quarter.
We also saw the bellwether of electric cars announce that it would be reducing the headcount of its salaried staff late last week. The long-term potential of ChargePoint is intriguing, but it's not a stock that should've moved higher last week. Between its bad quarter and the top dog in electric vehicle manufacturing bracing for a slowdown the stock could easily reverse last week's gains this week.
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 Hooker Furnishings, Stitch Fix, or ChargePoint this week.
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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Stitch Fix. The Motley Fool has a disclosure policy.
