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September 01, 2020 1:41pm
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2 Stocks With Too Much Downside Right Now to Risk Buying

As the stock market is expected to remain volatile in the near term, investors should not risk buying shares of Affirm Holdings (AFRM) and Ranpak Holdings (PACK), which are currently exhibiting too much downside because of their poor fundamentals. Read on…

The equity market reacted negatively after the Fed indicated that the fight against inflation was far from over during the annual Jackson Hole symposium. Powell warned that the central bank’s interest rate hikes would cause “some pain” to the economy.

The Fed’s hawkish stance and rising concerns of recession due to the deepening of the yield curve inversion will likely keep the stock market under pressure in the upcoming months.

Affirm Holdings, Inc. (AFRM) and Ranpak Holdings Corp. (PACK) are down more than 75% year-to-date and could witness further downside because of their poor fundamentals. So, these stocks are best avoided now.

Affirm Holdings, Inc. (AFRM)

AFRM provides digital and mobile commerce platforms by enabling a technology-driven payments network through partnerships with banks. The company's platform allows consumers to select their repayment options while the loans are funded and issued by its bank partner. Its platform has three elements: a point-of-sale payment solution, merchant commerce solutions, and consumer-focused applications.

AFRM’s total operating expenses increased 70.5% year-over-year to $641.36 million in the fourth quarter ended June 30, 2022. The company’s adjusted operating loss came in at $29.31 million compared to an operating income of $14.21 million in the year-ago period. Its net loss widened 51% year-over-year to $186.40 million. Also, its loss per share widened 41.3% year-over-year to $0.65.

Analysts expect AFRM’s EPS for fiscal 2022 to remain negative. The stock has lost 81.4% over the past nine months and 76.6% year-to-date to close the last trading session at $23.54.

AFRM’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong 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 an F grade for Stability and Sentiment and a D for Value and Quality. It is ranked #81 out of 82 stocks in the D-rated Technology - Services industry. Click here to see the other ratings of AFRM for Growth and Momentum.

Ranpak Holdings Corp. (PACK)

PACK provides product protection solutions for e-commerce and industrial supply chains in North America, Europe, and Asia. It offers line automation products, protective packaging solutions, cushioning protective systems, and wrapping protective systems.

For the fiscal second quarter that ended June 30, 2022, PACK’s total net revenue decreased 3.5% year-over-year to $86.80 million. The company’s non-GAAP loss from operations came in at $11.60 million, compared to an income from operations of $0.80 million in the prior-year period. Its non-GAAP net loss widened 127.4% year-over-year to $11.60 million. In addition, its loss per share came in at $0.14, widening 100% from the year-ago period.

For the quarter ending September 30, 2022, PACK’s revenue is expected to decline 13.3% year-over-year to $84.17 million. Its EPS for the current quarter is expected to remain negative. PACK has declined 86.1% over the past nine months and 85.4% year-to-date to close the last trading session at $5.49.

PACK’s POWR Ratings are consistent with this bleak outlook. It has an overall F rating, equating to a Strong Sell in our proprietary rating system.

It has an F grade for Growth and Sentiment and a D for Quality. Within the Industrial – Machinery industry, it is ranked #77 out of 80 stocks. To see the other ratings of PACK for Value, Momentum, and Stability, click here.

AFRM shares were trading at $23.73 per share on Wednesday afternoon, up $0.19 (+0.81%). Year-to-date, AFRM has declined -76.40%, versus a -15.62% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.


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