3 actions to avoid this week
I took a look at three actions to avoid last week, predicting that Nicolas, Lemonade, and Chuy’s were going to have a tough week. I fell short of the mark.
- Nikola shares rose 11% as the future electric vehicle maker rebounded from a tough run.
- Lemonade stocks got 2% lighter for the holiday shortened trading week. The AI expert insurance provider has been one of the hottest IPOs of 2020.
- Chuy’s investors saw a 5% drop. The Tex-Mex casual dining chain hit a new high to start the week, but it didn’t hold up.
The three stocks gained an average of 1.3%. The S&P 500 rose 1.4% during that time, giving me the smallest of wins. This week I see Flashing charge (NASDAQ: BLNK), Baidu (NASDAQ: BIDU), and Lyft (NASDAQ: LYFT) as vulnerable short-term investments. Here’s why I think these are three actions to avoid this week.
With 2020 in the books, I understand why Blink Charging investors are taking a winning lap. The action rose 2,198% – nearly 23 sacks – to become one of the undeniable champions of last year. Now ask yourself why a company with just $ 4.5 million in rolling income is trading over 300 times that multiple.
If you’re a bull, you’ll argue that Blink Charging is like driving: you have to look at the windshield to see what is happening, rather than the rearview mirror to see what you are leaving behind. The problem is, it’s not as if the future of the provider of electric car charging stations and associated offerings will soon gain its market capitalization of nearly $ 1.4 billion.
No one will argue that there will not be an increasing demand for electric vehicle charging in the future. We know where things are going. Problem is, batteries will improve giving you more miles between charges, and you can be sure that everyone from traditional gas stations to condo and office buildings will improve their on-site charging options at the same time. point of becoming a trivialized niche. Remember how investors turned to companies that provided Wi-Fi on time? It hasn’t ended very well for them even as we become more and more connected. The valuation of Blink Charging does not make sense at the moment and the catalysts will not add up in the future.
One of my favorite Chinese growth stocks over the years has been Baidu, and rest assured I haven’t stayed cold on China’s top search engine. Baidu has done a great job of rebounding in 2020 with slightly positive revenue growth after a rocky start last year.
There is a lot to like about how Baidu has leveraged its dominance to seek to expand into other areas of growth. Baidu has been a 26 bagger since 2006, and my long-term conviction remains strong. However, the headlines on Chinese equities for US investors will be tough this week. Baidu is not among stocks that collapsed Monday after an executive order to strike off companies identified as affiliated with the Chinese military. However, some US investors may get nervous about holding Chinese stocks in this climate until we have better visibility on how things are going to play out. Baidu is a stock to be avoided this week, but I’m still optimistic about its long-term outlook.
One of the biggest surprises of 2020 showing positive returns is Lyft. The carpooling platform saw its stock increase by 14% last year despite the fact that its activity was decimated by the pandemic. But unlike the industry leader, Lyft has been slow to expand outside of North America or its core personal mobility offering.
We don’t go out as often as we used to, and hiding for a ride in the backseat of a car that’s driven by a lot of other people isn’t a very tempting option. Lyft’s revenue fell 48% in its most recent quarter and 61% in the prior period.
Lyft has finally started to branch out and doesn’t just offer rides to people, but it might be too late. It may take a few years before Lyft returns to its pre-COVID-19 crisis position. I don’t think he won last year’s hikes, and it wouldn’t surprise me to see some of that come off the board in early 2021.
If you are looking for safe stocks, you probably won’t find them in Blink Charging, Baidu, or Lyft this week.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.