The Fed recently announced its fourth consecutive 75-bps rate hike and is expected to implement further hikes in the near term. Federal Reserve Chair Jerome Powell believes, “It’s very premature, in my view, to think about or be talking about pausing (rate hikes).”
Consequently, the interest rate-sensitive and tech-heavy Nasdaq composite has lost 4.7% over the past week and 33% year-to-date. Economists increasingly believe the Fed’s decision could tip the economy toward a recession.
Deutsche Bank AG (DB) chief U.S. economist Matthew Luzzetti said, “The higher the Fed needs to go on the terminal rate, it raises our conviction that a recession will happen next year.”
Given this backdrop, fundamentally weak Nasdaq stocks Advanced Micro Devices, Inc. (AMD) and Marvell Technology, Inc. (MRVL) might be best avoided before 2023.
Advanced Micro Devices, Inc. (AMD)
AMD operates as a semiconductor company worldwide. The company operates in two segments, Computing and Graphics; and Enterprise, Embedded, and Semi-Custom.
AMD’s forward EV/Sales of 4.15x is 65.5% higher than the industry average of 2.50x. Its forward Price/Sales of 4.26x is 77.4% higher than the industry average of 2.40x.
AMD’s trailing-12-month CAPEX/Sales of 1.80% is 21.4% lower than the industry average of 2.30%, while its trailing-12-month asset turnover ratio of 0.58% is 8.6% lower than the industry average of 0.63%.
AMD’s net revenue came in at $5.57 billion for the third quarter that ended September 24, 2022, up 29% year-over-year. However, its operating loss came in at $64 million compared to an income of $948 million in the year-ago period. Moreover, its net income came in at $66 million, down 92.8% year-over-year, while its EPS came in at $0.04, down 94.7% year-over-year.
AMD’s revenue is expected to decrease 5.5% year-over-year to $5.56 billion for the quarter ending March 2023. Its EPS is expected to fall 38.1% year-over-year to $0.70 for the same period. Over the past year, the stock has lost 54.8% to close the last trading session at $62.19.
AMD’s POWR Ratings reflect its poor prospects. It has an overall F grade, which indicates a Strong Sell. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an F grade for Stability and a D for Growth, Sentiment, and Quality. Click here to access the additional POWR Ratings for AMD (Value and Momentum). AMD is ranked #89 out of 91 stocks in the Semiconductor & Wireless Chip industry.
Marvell Technology, Inc. (MRVL)
MRVL and its subsidiaries design, develop, and sell analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits.
MRVL’s forward EV/Sales of 6.08x is 142.6% higher than the industry average of 2.50x. Its forward Price/Sales of 5.40x is 125% higher than the industry average of 2.40x.
Its trailing-12-month net income margin of negative 3.95% is lower than the industry average of 3.87%. Its trailing-12-month ROCE of negative 1.44% is lower than the industry average of 6.51%.
MRVL’s net revenue came in at $1.52 billion for the second quarter that ended July 30, 2022, up 41% year-over-year. However, its total operating expenses came in at $746.90 million, up 17% year-over-year. Moreover, its total current liabilities came in at $2.16 billion for the period ended July 30, 2022, compared to $1.39 billion for the period ended January 29, 2022.
Over the past year, the stock has lost 45.5% to close the last trading session at $38.97.
MRVL has an overall D grade, equating to Sell in our POWR Ratings system. Also, it has a D grade for Stability and Quality.
Click here to access the MRVL ratings for Growth, Value, Momentum, and Sentiment. It is ranked #78 in the Semiconductor & Wireless Chip industry.
AMD shares rose $0.51 (+0.82%) in premarket trading Monday. Year-to-date, AMD has declined -56.78%, versus a -19.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
2 Nasdaq Stocks You Need to Sell Before 2023 StockNews.com
