My "three stocks to avoid" column finally got back on track this past week. The three names I figured were going to move lower for the week -- Tesla, Sleep Number, and Lucid Group -- finished up 2%, down 10%, and down 9%, respectively, averaging out to a 5.7% decline.
The S&P 500 declined 2.8% for the week, so the stocks I figured would move even lower did exactly that. I was right, pushing my run to being correct in 19 of the past 27 weeks.
This week, I see Tempur Sealy (TPX -1.43%), Tesla (TSLA -4.95%), Noodles & Co. (NDLS -8.81%) as stocks you may want to consider steering clear of. Let's go over my near-term concerns with all three investments.
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Tempur Sealy
I fared well betting against a mattress maker last week, so I may as well sleep on that niche again this week. Tempur Sealy is the company behind a couple of the best-known bedding brands, but it already warned that the first-quarter results it will deliver on Thursday came under pressure after robust sales during the Presidents Day weekend.
Tempur Sealy warned at the end of last month that slumping consumer confidence, international COVID-19 variant outbreaks, and geopolitical events have eaten into the enthusiasm of potential shoppers. It announced that sales rose just 15% through the first three months of this year, below the 20% top-line growth consensus of analysts. Shouldn't they know better? Some Wall Street pros have apparently been napping over the past few weeks.
Momentum isn't on the mattress maker's side. Tempur Sealy missed analyst top- and bottom-line targets last time out, and at least three Wall Street pros lowered their price targets for the stock this month after its disappointing financial update. They're concerned about lackluster channel checks and an overall slowdown in spending on home products. If you're tossing and turning at night it could be time to find a new mattress stock.
Tesla
The one stock from last week's column to move higher was Tesla, and it's back for another test-drive. I'm a big fan of Tesla. I own the car. I own the stock. It's just the valuation -- with Tesla back at a market cap above $1 trillion -- that has me concerned.
Tesla came through with a blowout quarter last week. It's clear that Tesla continues to set itself apart from the more established automakers and even upstarts making a push to be relevant in the rapidly expanding market for electric vehicles. Betting against Elon Musk or Tesla has been a bad bet in recent years. But I still feel the stock is vulnerable.
Tesla has been able to steer through the market malaise. The shares shifted into drive last year as most growth stocks were stuck in reverse. I'm just not sold on the idea that Tesla is worthy of the market's fifth-largest market cap at this point. It won't be immune to market sell-offs forever.
Noodles & Co.
Restaurants seem like an obvious reopening play, but Noodles & Co. has been a laggard. The stock hit a 52-week low on Friday, and it has earned the downticks. Revenue has finally caught up to 2019 levels, but the eatery operator has fallen short of Wall Street's profit targets in three of the past four quarters.
Noodles & Co. reports its first-quarter results on Wednesday afternoon. History has not been kind. Margins have taken a hit as wage inflation and commodity increases eat away at the bottom line. The stock may be trading at its lowest point since the springtime of 2020, but it's been a dud during earnings season lately.
It's going to be a bumpy road for some of these investments. If you're looking for safe stocks, you aren't likely to find them in Tempur Sealy, Tesla, and Noodles & Co. this week.
