As we embrace the heat of July, it’s time to break down the ice around the chilling prospect of a July stock crash. The volatility in the financial markets means investors have to navigate a minefield of potential stock pitfalls.
Identifying the stocks to sell before a potential crash might not be as straightforward as one would hope, so I’ve curated a list of the three worst picks to wager on now. Let’s plunge headfirst into this sweltering hotbed of action without further ado.
Electrameccanica Vehicles (SOLO)
Electrameccanica Vehicles (NASDAQ:SOLO), the Canadian EV upstart, seems to be picking up speed in production, with 170 units of its SOLO three-wheeled EV leaving the factory floor in the first quarter. Its unique, single-seater EV aims to carve a niche in the hotly competitive EV sphere.
However, it plans to dilute equity to fund operations over the next year to keep its business afloat. Moreover, the company grapples with a net loss of nearly $12.3 million and dwindling working capital.
With a reported quarterly cash burn rate surpassing $20 million, the company’s financial position is teetering on the brink. The company’s decision to relocate EV production from China to the U.S. is anticipated to strain its fiscal health further. Implementing workforce reductions may be a temporary fix, but it can’t effectively mask the deeper, systemic problems.
Blue Apron (APRN)
Blue Apron (NYSE:APRN) once simmered with potential, viewed as one of the top players in the stay-at-home economy. However, based on its recent results, it’s clear that the business is unlikely to keep the burner lit for long-term growth. Its sales growth has stagnated, and with losses swelling, its stock price has experienced a massive dip. Despite the relief of a lighter debt load and a shift towards an asset-light business model, Blue Apron’s recipe for long-term success remains in positive sales growth.
Complicating matters further, the firm finds itself in a relatively tough spot. Amazon’s (NASDAQ:AMZN) foray into the grocery space has stirred up significant challenges for Blue Apron. On top of that, the post-pandemic return to normalcy and rising food prices have curbed the appetite for meal kits. This leaves its investors in a quandary.
PetMed Express (PETS)
PetMed Express (NASDAQ:PETS) seems to be in a tricky spot. Despite bolstering its customer base by a healthy 12% in the first quarter, its sales growth got caught in a tailspin, shrinking by 5.4% during the same period. This downward trend has persisted, with sales dwindling over the last 12 months. This slip from a respectable $6 million net income in the first quarter of 2022 to a $5.1 million net loss a year is indicative of company woes.
The firm is also up against some stiff competition. At the height of the pandemic, the online pet pharmacy fetched a trading price of $40, but a recent downturn in demand has weighed down its performance. Meanwhile, its primary competition in Petco (NASDAQ:WOOF) is nipping at PetMed Express’s heels with its low-cost strategy, generating gross profits over a third higher while maintaining similar overheads.
PETS stock offers what appears to be a mighty dividend yield of 8.7%. However, its more of a dividend trap considering its weak financials and anemic dividend growth in the past five years.
On the date of publication, Muslim Farooque 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
