The stock market has had a wretched year due to various macroeconomic and geopolitical headwinds. The Fed’s aggressive interest rate hikes have failed to bring the surging inflation under control so far.
August's Consumer Price Index (CPI) rose 8.3% year-over-year, beating the market’s expectations. This prompted the Fed to announce the third consecutive 75-basis-point rate hike in September. This, along with the upward revision of the key rate estimate for this year, has raised concerns over an economic downturn.
Fed officials predict that the key rate will end this year between 4.25% to 4.5%, up from the previously predicted range of 3.25% to 3.5%. Since this is expected to hurt businesses significantly by making borrowing expensive, the major market indexes tumbled last month.
As the market is expected to remain volatile ahead of the monthly jobs report this week, we think fundamentally weak stocks Advanced Micro Devices, Inc. (AMD), Mullen Automotive, Inc. (MULN), and American Virtual Cloud Technologies, Inc. (AVCT) are best avoided now despite their high trading volume.
Advanced Micro Devices, Inc. (AMD)
AMD is a global semiconductor company. Its segments include Computing and Graphics, and Enterprise, Embedded, and Semi-Custom. The Computing and Graphics segment includes desktop and notebook microprocessors, accelerated processing units, chipsets, GPUs, data centers, etc.
The Enterprise, Embedded, and Semi-Custom segment includes server and embedded processors, semi-custom system-on-chip (SoC) products, etc. AMD has traded at an average volume of 79,712,904 over the past three months.
AMD’s operating income declined 36.7% year-over-year to $526 million for the second quarter that ended June 25, 2022. Its net income fell 37% year-over-year to $447 million. Also, its EPS came in at $0.27, down 53.4% year-over-year. In addition, its gross margin came in at 46%, compared to 48% in the year-ago quarter.
Analysts expect AMD’s EPS for the quarter ending March 31, 2023, to decline 4.5% year-over-year to $1.08. The stock has declined 27.1% over the past month and 56% year-to-date.
AMD’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a D grade for Stability. It is ranked #83 out of 92 stocks in the Semiconductor & Wireless Chip industry. Click here to see the other ratings of AMD for Growth, Value, Momentum, Sentiment, and Quality.
Mullen Automotive, Inc. (MULN)
MULN manufactures and distributes electric vehicles. It also operates CarHub, a digital platform that leverages AI to offer an interactive solution for buying, selling, and owning a car. MULN has traded at an average volume of 76,235,290 over the past three months.
For the second quarter that ended June 30, 2022, MULN’s general and administrative expenses increased 121.2% year-over-year to $10.90 million. Its loss from operations rose 184.5% year-over-year to $18.22 million. Also, its net loss came in at $59.47 million, representing an increase of 289.9% year-over-year.
The stock has declined 96% over the past year and 93.7% year-to-date.
MULN’s POWR Ratings reflect this weak outlook. It has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
It has an F grade for Value and Stability and a D for Sentiment and Quality. Within the D-rated Auto & Vehicle Manufacturers industry, it is ranked #57 out of 65 stocks.
American Virtual Cloud Technologies, Inc. (AVCT)
AVCT is a pure-play cloud communications and collaboration company providing cloud-based enterprise services worldwide. The company’s Kandy cloud communications platform is a cloud-based, real-time communications platform. AVCT has traded at an average volume of 63,784,480 over the past three months
AVCT’s total revenues declined 24.8% year-over-year to $3.72 million for the second quarter that ended June 30, 2022. Its cloud subscription and software revenues fell 10.8% year-over-year to $3.62 million. In addition, its gross loss came in at $1.55 million, compared to a gross profit of $1.38 million in the year-ago period.
Analysts expect AVCT’s EPS for fiscal 2022 to decline 11.5% year-over-year to $103.59 million. The stock has declined 92.8% over the past year and 91.7% year-to-date.
AVCT’s weak prospects are reflected in its POWR Ratings. It has an overall rating of D, equating to a Sell in our proprietary rating system.
It has an F grade for Quality and a D for Growth, Stability, and Sentiment. It is ranked #73 out of 81 stocks in the Technology – Services industry. Click here to see the other ratings of AVCT for Value and Momentum.
AMD shares were trading at $65.61 per share on Monday morning, up $2.25 (+3.55%). Year-to-date, AMD has declined -54.41%, versus a -22.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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