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2 Stocks Trading Under $3: Are They Really Bargains?

Rising inflationary pressure, aggressive interest rate hikes, and increasing odds of a recession have led major stock market indices to witness massive sell-off lately. FuboTV (FUBO) and Sundial Growers (SNDL) have lost significantly and are currently trading below $5. However, considering their weak fundamentals, it could be wise to avoid these stocks. Read on to learn more…

The stock market has been experiencing wild swings since the beginning of the year due to rising inflation and the consequent interest rate hikes to combat it. Bank of America analysts predict a mild recession will emerge in the second half of 2022 as inflation fears weigh on consumers.

The forecast considered the consumer price index’s 9.1% increase in June, beating the 8.8% estimate. BofA also anticipates GDP to decline by 1.4% in the fourth quarter of 2022 compared to the previous year, followed by a 1.0% increase in 2023.

Amid the current market turbulence, fuboTV Inc. (FUBO) and Sundial Growers Inc. (SNDL), which are trading under $3, should be best avoided, given their bleak fundamentals.

fuboTV Inc. (FUBO)

FUBO functions as a live TV streaming platform for sports, news, and entertainment content in the United States and worldwide. Its fuboTV platform permits customers to access content through streaming devices and on SmartTVs, computers, mobile phones, and tablets.

For the first quarter ending March 31, 2022, FUBO’s operating loss increased 107.8% year-over-year to $135.24 million. The net loss increased 100.7% from its year-ago value to $140.72 million, while its loss per share grew 50.8% from its prior-year quarter to $0.89. The net cash used in operating activities grew 135.2% year-over-year to $126.69 million.

Analysts expect FUBO’s EPS to remain negative in the second quarter ending June 2022. The stock has declined 90.4% over the past year and 91.1% over the past nine months to close its last trading session at $2.47.

FUBO's POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to 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.

FUBO has an F grade for Sentiment and Stability and a D for Growth. Within the F-rated Entertainment - Sports & Theme Parks industry, it is ranked #16 of 16 stocks.

To see additional POWR Ratings for Quality Value and Momentum for FUBO, click here.

Sundial Growers Inc. (SNDL)

Headquartered in Calgary, Canada, SNDL is involved in the production, distribution, and sale of cannabis products in Canada. The company operates through Cannabis Operations and Retail Operations segments. It engages in the cultivation, distribution, and sale of cannabis for the adult-use markets; and private sale of recreational cannabis through corporate-owned and franchised retail cannabis stores.

In the first quarter ending March 31, 2022, SNDL’s gross revenue declined 3.8% year-over-year to $11.31 million, while its net loss came in at $38.04 million. The adjusted EBITDA loss stood at $675.00 million over the period.

The consensus EPS estimate of $0.01 represents a year-over-year decline of 76.1% for the second quarter ending June 2022. The company's shares have plunged 60.8% year-to-date and 50.4% over the past nine months to close its last trading session at $0.33.

SNDL’s weak fundamentals are reflected in its POWR ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The stock also has an F grade for Growth and Stability and a D for Quality. In the F-rated Medical - Pharmaceuticals industry, it is ranked 169 of 171 stocks.

In addition to the POWR Ratings grades I have just highlighted, you can see the SNDL’s rating for Momentum, Value, and Sentiment here.

FUBO shares were trading at $2.53 per share on Friday afternoon, up $0.06 (+2.43%). Year-to-date, FUBO has declined -83.70%, versus a -18.42% rise in the benchmark S&P 500 index during the same period.

About the Author: Spandan Khandelwal

Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.


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