The last things you need to have distressing your portfolio this month are F-rated stocks. I believe the stock market is in a good place, and economists believe that third-quarter GDP could exceed the 2.4% the U.S. recorded in Q2.
But if you have F-rated stocks, your August will be an expensive waste.
Think of it this way – holding onto underperforming stocks is particularly painful when the stock market is doing well, as it is in 2023. Positive gains in the market add to your account, giving you more options to invest or build a retirement portfolio to allow you to fulfill your dreams.
The name of the game when investing isn’t just making money – it’s about outperforming the market. So if the Dow Jones Industrial Average climbs another 5% this month, you want to do even better than that.
And you can’t do it when F-rated stocks are getting in the way.
We used the Portfolio Grader to pick out seven of these F-rated stocks for you to avoid now. If you see one of these names in your portfolio – you should probably do something about it.
Mullen Automotive (MULN)
I find it pretty hard to have confidence in a so-called automotive company that has a market cap of less than $100 million. Or is priced at around 12 cents per share. But both measurements describe sad-sack Mullen Automotive (NASDAQ:MULN), the first of our F-rated stocks.
Mullen is trying to be an electric vehicle company, with plans to sell crossovers, sports cars, pickup trucks and commercial vehicles, but it just can’t get off the ground.
The company’s Aug. 3 shareholder meeting should be an interesting one. Mullen is asking shareholders to vote on a series of proposals, including a reverse stock split between 1-for-2 and 1-for-100.
But honestly, even if Mullen could execute a ridiculous 1-for-100 stock split and get its price – momentarily – over the $1 market to maintain Nasdaq compliance, I can’t see it lasting long. Mullen is headed for zero. And it gets an “F” rating in the Portfolio Grader.
Canoo (GOEV)
Canoo (NASDAQ:GOEV) is a California-based EV company in somewhat better shape than Mullen Automotive. But the bar’s not set too high in that comparison.
Canoo went public in 2020 in a special purpose acquisition company deal – those were pretty popular at the time – but the company’s not been able to find traction. Canoo still isn’t mass-producing electric vehicles, and the stock has disappointed.
Despite a 25% jump in a single day in July after the company delivered three crew transportation vehicles to NASA’s Kennedy Space Center in Florida, Canoo stock is still less than 65 cents per share. It’s down 48% this year.
Second-quarter earnings will come out later this month, but Canoo will need to improve and beat expectations if it wants to regain any investors’ confidence.
It’s better to sit this one out and keep your hands away from GOEV stock. It has an “F” rating in the Portfolio Grader.
Verizon (VZ)
You don’t need to be a failing EV company to be among the F-rated stocks. Sometimes blue-chip names find themselves in a deep enough hole to earn an F-rating. Verizon (NYSE:VZ) is living that nightmare now.
The problem for Verizon is that it’s carrying too much debt. As of June, it had $157.3 billion in debt – a number growing from a year ago (when it was $151.2 billion.
Yes, Verizon has plenty of cash at more than $4 billion. But the debt, brought on heavy spending on wireless spectrum licenses for its 5G connections, makes the company vulnerable.
It’s no wonder that VZ stock is down 15% this year – a huge number for any blue-chip stock when the market is in the black. VZ earnings in the second quarter were down 3% from a year ago at $32.6 billion, and its profit margin and operating income also dropped.
VZ stock has an “F” rating in the Portfolio Grader.
ZIM Integrated Shipping Services (ZIM)
This is an excellent example of why it’s important to review your portfolio from time to time.
Even if you’re more of a buy-and-hold investor, there should be red flags any time one of your stocks falters badly enough that it gets an F rating.
At the beginning of the year, I was prepared to give ZIM Integrated Shipping Services (NYSE:ZIM) the benefit of the doubt, despite a 60% drop in stock price. The company still had good shipping rates and paid an oversized dividend that was actually more than the stock was worth.
But time caught up to ZIM, and so has the Portfolio Grader. The potential that ZIM showed earlier this year never came to fruition.
The company lowered its 2023 guidance, citing continued weakness in freight rates, and dropped expected adjusted EBITDA from a range of $1.8 billion and $2.2 billion to a range of $1.2 billion and $1.6 billion.
It also says it’s now expected an adjusted loss of $500 million to $100 million this year. Previously, it guided for a gain of $100 million to $500 million.
And the dividend? It’s gone. ZIM’s practice is to pay 30% to 50% of its annual net income as a dividend, but since the company didn’t turn a profit in Q1, the dividend went up in smoke.
ZIM stock is down 13% this year. It gets an “F” rating in the Portfolio Grader.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) is a play on the EV space. The company designs, manufactures, owns and operates charging stations for electric vehicles.
Theoretically, it should be a profitable business, as EV sales are expected to top 31 million by 2030. That would be nearly a third of all total vehicle sales.
Blink says it has sold or deployed more than 950 DC fast chargers and more than 7,500 level 2 chargers since 2020.
However, the major problem with Blink is Tesla (NASDAQ:TSLA) and its Supercharger network. The leading manufacturer of EVs has its own network of charging stations with more than 12,000 units in the U.S. and Canada.
Tesla recently signed agreements with Ford (NYSE:F) and General Motors (NYSE:GM), allowing its customers to use Tesla’s network.
Is there room left for Blink Charging? Perhaps not. Earnings in the first quarter included revenue of $21.67 million and an EPS loss of 49 cents per share, both worse than analysts’ expectations for $22.05 million and an EPS loss of 46 cents.
BLNK stock is down 44% this year and has an “F” rating in the Portfolio Grader.
Tyson Foods (TSN)
Tyson Foods (NYSE:TSN) is a household name, producing nearly 20% of the beef, pork and chicken in the U.S. Its brands include Jimmy Dean, Hillshire Farm, Ballpark and others.
But lately, this stock isn’t so tasty. Elevated costs, thanks to raw materials and labor, are eating into profit margins. Gross profit in the second quarter fell to 4% from 13.2% a year ago. The company’s operating margin dropped to 0.5% from 8.9% a year ago.
On top of that, Tyson is getting pressured with reduced beef supplies, lower commodity prices for chicken sales, and markets such as China that continue to restrict chicken imports for fear of bird flu.
All this helped push TSN stock down 11% so far this year. It has an “F” rating in the Portfolio Grader.
Frontier Communications Parent (FYBR)
Frontier Communications Parent (NASDAQ:FYBR) is a Connecticut-based telecommunications company.
Formerly known as Frontier Communications (and previously Citizens Communications), it changed to its current name in 2021 after reemerging from bankruptcy and going public once again.
The business, however, remains. Frontier offers internet services in 25 states, with 2.9 million broadband customers and 1.8 million fiber broadband customers.
As an investment, however, the newly formed Frontier has been shaky. The company went public at $30 per share, but it’s down to $18. So far this year, FYBR stock is off nearly 30%.
It’s also failing to show revenue growth. Revenue’s fallen for the last five years — in the first quarter, revenue came in at $1.44 billion. Investors need those numbers to be going up, not down. Q2 earnings are expected to drop on Aug. 4, and I’m not expecting the trend to change.
FYBR stock has an “F” rating in the Portfolio Grader.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) TSLA. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.
