Source: chanpipat / Shutterstock.com
The stock market was strong in 2023, and that carried over into 2024 as well. After an initial drop in April, the stock market rose as tech giants reported strong financial results. However, there are some concerns on the horizon. Rising inflation, rising interest rates, and high levels of consumer debt can lead to future roadblocks and stocks to avoid.
Investors shouldn’t offload their portfolios during a crash. Holding stocks for years, if not decades, can yield meaningful long-term results. However, some positions are better than others. Check your portfolio and make sure it does not contain these three stocks that you should avoid.
Snap (Snap)
Source: BigTunaOnline / Shutterstock
snap (New York Stock Exchange:snap) is a contrarian pick for this list because investors were excited about the company’s recent earnings report. The Q1 2024 print excited investors, sending the stock up 28%.
The most notable change is that the company’s revenue increased 21% year-over-year. This is the number required for a growth stock. The number of daily active users also increased by 10% compared to the previous year. However, there are also some issues.
The company’s net loss was $305 million. This is an improvement from the $329 million net loss in Q1 2023, but a 7% improvement is not enough. Snap remains heavily in debt, and a slowing economy will quickly halt its revenue growth.
Guidance for the second quarter means revenue will increase 15% to 18% year-over-year. Revenue increased 194% year-over-year, with some of the profit driven by growth in Snapchat+ subscriptions. However, the company’s profitability still deviates significantly from GAAP. I would be a little more interested if the company didn’t have a $24 billion market cap or if it wasn’t cutting its losses even further.
ETSY
Source: Sergey Elagin/Shutterstock
etsy’s (NASDAQ:ETSY) It seems that his growing days are over. Consolidated gross merchandise sales in the fourth quarter of 2023 decreased by 0.7% year-on-year, while other e-commerce companies reported strong revenue growth. Etsy did have 4.3% year-over-year revenue growth, but that growth was driven by higher fees. Before users look for other platforms, there are limits to how much Etsy can charge.
If consolidated total sales remain flat, the company will likely continue to struggle. Etsy has already warned of poor performance in the first quarter of 2024, and GMS is expected to see a low single-digit decline year over year. Management expects the turnaround to progress in the second quarter of 2024. This may be because Etsy faces more generous compensation.
Etsy soared during the pandemic on the back of impressive economic growth, then collapsed. The stock is down 33% over the past year and 17% since the beginning of the year. It’s hard to get excited about stock prices, and a weak economy with weak consumer spending could pose further challenges for e-commerce companies.
Cava
Source: Nicole Glass Photography / Shutterstock.com
putting kava (New York Stock Exchange:kava) It’s hard to list on this list. The Mediterranean trend is strong and Cava is expanding and could be a great option for investors looking at a 10-year horizon.
However, for a restaurant chain that is expected to slow down in FY2024, the P/E ratio of 330 cannot be ignored. Cava opened 72 stores in fiscal 2023, bringing the total number of stores to 309. This represents a 30.4% year-on-year increase in the total number of Cava restaurants. Revenue growth was also strong, increasing 52.5% year-on-year. His net income also turned positive at $2 million, compared to his $18.8 million net loss in the same period last year.
However, the company expects to open only 48 to 52 new restaurants in fiscal 2024, which is only a 16.2% year-over-year increase compared to the company’s 309 restaurants.
The company also expects same-store sales growth in fiscal 2024 to be between 3.0% and 5.0% compared to the previous year. On the other hand, the company’s same store sales growth rate for FY2023 is 17.9% compared to the previous year. The stock is under pressure, especially since it’s up 69% since the beginning of the year.
On the date of publication, Mark Guberti did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
