Five Bargain Stocks You’ll Want to Avoid at All Cost
Knowing when to jump in on stocks trading at a bargain is a great way to make money in any market.
But sometimes when you think a stock is trading at a value, it could cost you everything as the stock continues to sink lower.
Today’s Buy, Sell, or Hold features five such stocks that look good on the surface. But when you dig a little deeper, you start to realize why they’re so low right now.
07/29/2022 Toxic Stock List Transcript
Hey everybody. Shah Gilani coming to you with your Friday BS.H, as in buy, sell, or hold where you guys send in stocks you want me to comment on. I got five for you today. And I get where you are all coming from. Market is bouncing. A lot of stuff is on sale. A lot of stuff looks darn good right? Some bottom fishing is in order, let’s take it away.
First up Lyft Inc. (LYFT). Yeah, the ride sharing company. I’ve never been a fan of the product. You know, the actually I use it sometimes. I prefer Uber, but nonetheless, I don’t think they’re gonna make money and they’re not making any money now. So as cheap as it looks, people it’s still a sell in my book. Look, here’s a stock that was at $57. It’s now $13.88. I get the bottom fishing attempt. But no, it’s still a sell because they don’t make any money. Revenue is $ 3.47 billion, pretty nice. Profit margin? Minus 22%. They lose money. Net income available to common shareholders – you guys know my favorite measure of profitability – negative $778 million. There may come a time to buy Lyft, but it’s probably gonna be a long way off. So if you own it, sell it. you still got time to take whatever profit you have out of it. Which probably isn’t much. Sell it
Next up Uber Technologies (UBER). Same story. You know, I just don’t get the profitability concept here.
I get the concept of ride share. Totally get that. I get the whole food delivery. I get everything that they’re trying to do. But Uber technologies? Not really come on. So as far as Uber goes, yeah, attempting buy down at $23 and change down from $49. But wouldn’t touch it with a 10 foot pole. I think it’s got a lot further to go. It’s a sell people. Just cause it looks cheap – tons of revenue, 21 plus billion dollars in revenue. What do they do with that? Not much because their profit margin is minus 29%. They lose money. How much money do they lose? How about net income available to common shares? Negative $6.32 billion over the last 12 months. Loser. Sell people.
Next up Zillow (ZG). I get, it looks cheap down here. $34 in change down from $208. Sounds like a bargain, looks like a bargain, but it’s not people. Zillow couldn’t make money When the real estate market was flying high. Now maybe I don’t say it’s bursting, but I think it’s certainly gonna soften in here. So now they’re gonna make money? No, they got a negative profit margin here at minus 5%, loses about $563 plus million dollars a year. Come on people. Why would you buy? Oh, it looks cheap now. No. Sell it.
Next up the RealReal (REAL). Guess what? I like the whole concept here. You know, buying clothes online, used stuff. It’s great concept. It’s wonderful. Except the company doesn’t make any money. Doesn’t even have that much income. Guess what? $515 million in revenue. That’s really not much to work with. Especially when you have a profit margin of minus 46%. This one has debt of $605 million and only cash of less than $350 million. Worst part of all that is – ton of cash, not enough, much more debt – the operating cash flow critical to pay that debt minus $143 million over the trailing 12 months. Why would you buy this? Just because it looks cheap. Yeah. $2 and 36 cents. That certainly looks cheap down from 30. Ah, forget it. People I would sell it. I wouldn’t buy this. There may come a time that the RealReal becomes a real deal, long way off. So there’s plenty of other better places to put your cash
Last but not least – a lot of questions about Snap Inc (SNAP) Way down here, it’s still a sell people. I know. Why do you think I’m crazy? It’s down from $83, $9 and 67 cents. Last time I looked at it awfully, awfully cheap. But you know what? There’s a reason that Snap isn’t making money. It’s gonna take a while for it to make money. There’s gonna come a time where Snap may be a buy, but it’s not now. The market isn’t conducive just because we’ve had a nice bounce and Snap’s been hit really hard.
If you think it is a buying opportunity. If you wanna be speculative, you want to take a flyer on any of these stocks. I would take a flyer on snap. But frankly for me, I’d rather buy puts on it because I think it’s got lower to go. So Snap revenue, $4.54 billion. Hmm, profit margin minus 18%. How are they gonna make money? Cash $4.87 billion, debt $4.2. But the loss here, $31 million a year trailing 12 months. People it’s not making money. It’s losing money, negative profit margin. It’s building it’s debt book, not its cashbook. They’re gonna start to dwindle that cash down, paying off their debt. They’re gonna get in worse, worse shape. So snap may come a time. Certainly not. Now it’s a sell. Look for it later. I don’t know. I’ll tell you, look for it around five bucks and then maybe it’s a buy that’s it for day.
Catch you guys next week. Cheers.