Finding profitable and robust companies with reasonable projections for the near and long-term future can take a lot of work for investors when the stock market is experiencing more than usual volatility. Investors should stick with solid companies with a great track record because other more speculative stocks may see a more significant moment with their share price. That could be great or disastrous for investors.
Below, I list three companies with stocks to avoid, especially in this market environment. These entities have all recently experienced poor earnings results, and their future outlook could look better.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH), based in Fremont, California, produces solar energy solutions primarily for residential purposes. The company sells EV chargers, energy storage products and microinverters, which help transfer solar energy to usable energy output for in-home purposes. They also offer cloud-based monitoring solutions.
Over the past year, Enphase Energy has seen a steep decline in its share price of approximately 74%. That is due to several factors, including overall issues with the renewable energy market. With the increased interest rates, large-scale projects requiring significant capital and financing are becoming less cost-effective. Enphase has experienced weak growth and demand for its solar energy products is improving little.
The company’s earnings result for the third quarter showed a drop in revenue of 13%, and net income fell by 1% compared year-over-year (YoY). Enphase saw a waning in demand for its products within Europe for the quarter.
Most companies in the renewable energy space are risky buys right now due to the recent market conditions, and investors should be cautious going forward.
Mercury Systems (MRCY)
Mercury Systems (NASDAQ:MRCY) is an aerospace and defense company in Andover, Massachusetts. The company works with over 25 contractors and supplies the industry with a wide range of products, including oscillators, filters, receivers, digital converters, modules, transceivers, memory units and integrated subsystems.
MRCY released its most recent earnings report on November 7, showing revenue dropped 20%, and a net loss that more than doubled to $36 million compared to last year. Following the news, Mercury Systems also reported over $1 billion in backlogged orders.
Since November of last year, the company has seen a loss in its share price of 32% due to disappointing earnings results and a poor outlook for the future.
Mercury Systems has been struggling recently, and there are many other much more sensible options for similar stocks that investors should be looking at within the industry.
Estée Lauder (EL)
Estée Lauder (NYSE:EL) provides personal care products and is based in New York, New York. Its products include facial masks, sunscreen, acne products, moisturizers, nail polishes, powders, brushes, lotions, shampoos, conditioners and candles under the brands of Tom Ford, Too Faced, M-A-C, Aveda and The Ordinary.
On November 1, Estée Lauder released its earnings report for the first quarter of fiscal 2024. It stated that net income fell by 93% and total revenue dropped by 10% YoY. Estée Lauder saw a 22% drop in net sales for its skin care products and reduced sales within Africa and Asia within the same period. The company also lowered its guidance for the remainder of the year.
Following this lackluster earnings report, EL stock’s price fell 19%. Throughout this last year, it has dropped by 53%. With a poor outlook for the near future, a significant drop in earnings and a recent cybersecurity breach, there are better options for investors looking to invest in companies providing personal care products.
As of this writing, Noah Bolton did not hold (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.
