Regional bank failures and other macroeconomic headwinds have exacerbated concerns about an economic slump. The resultant volatilities are anticipated to linger for a while. Given this backdrop, let us look at some stocks Li-Cycle Holdings Corp. (LICY), Greenidge Generation Holdings Inc. (GREE), and Singularity Future Technology Ltd. (SGLY), and find out why it might be best to avoid them in April.
The inflation cooled down in March 2023 to 5% year-over-year, had spurred investor optimism to some extent. However, the hopes were quashed after the Fed’s meeting minutes were released, which signaled the economy tipping into a recession later in the year.
Moreover, since inflation is far above the Fed’s target range of 2%, experts anticipate that future interest rate hikes are possible. Christopher Waller, a member of the Fed’s governing board, believes that slow progress toward inflation would mean monetary policy is required to remain tight for a substantial period of time and longer than markets anticipate.
However, some experts believe such persistent rate hikes could tilt the economy into a recession, and the effects might be excruciating. Former Harvard University president Larry Summers anticipates a 70% chance of a U.S. recession over the next 12 months.
Considering such uncertainties, stocks with poor quality and declining financials, LICY, GREE, and SGLY, might be best avoided now.
Li-Cycle Holdings Corp. (LICY)
LICY operates as a lithium-ion battery resource recovery and recycling business company. Based in Mississauga, Ontario, Canada, the company’s offerings include a mix of cathode and anode battery materials, like lithium, nickel, and cobalt.
LICY’s trailing-12-month EBITDA margin of negative 267.80% compares to the 13.21% industry average. Likewise, its trailing-12-month ROCE and ROTC of negative 11.56% and 9.61% compare to the industry averages of 13.67% and 7.05%, respectively.
For the two-month period that ended December 31, 2022, LICY’s total revenues stood at $5.90 million. Its loss from operations widened 100% from the prior-year period to $19.40 million. Its cash used by investing activities increased 18.1% from the prior-year period to $21.50 million.
Also, its net income and comprehensive income declined 56.4% year-over-year to $1.70 million, while its net income per share decreased 50% year-over-year to $0.01.
Analysts expect LICY’s revenue to come in at $12.18 million for the fiscal second quarter of 2023. For the same quarter, its EPS is expected to decline 12.2% year-over-year to negative $0.15.
LICY’s shares have declined 28.7% over the past year and 5.2% intraday to close its last trading session at $5.34.
LICY’s poor prospects are reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
LICY is also rated an F for Growth, Value, Stability, Sentiment, and Quality. It is ranked last in the 15-stock Waste Disposal industry.
Beyond what we have mentioned above, one can see additional POWR Ratings for Momentum for LICY here.
Greenidge Generation Holdings Inc. (GREE)
GREE operates as an integrated cryptocurrency datacenter and power generation company. The company owns and operates cryptocurrency datacenters in New York and South Carolina. It also owns and operates a 106 MW nameplate natural gas power generation facility.
GREE’s trailing-12-month EBITDA margin of negative 7.56% compares to the 9.25% industry average. Likewise, its trailing-12-month ROCE and ROTC of negative 326.22% and 12.70% compare to the industry averages of 1.96% and 1.97%, respectively.
GREE’s net revenues decreased 55.3% year-over-year to $16.01 million for the fiscal fourth quarter that ended December 31, 2022. Its loss from operations of $129.05 million for the same quarter compares to the income from operations of $6.63 million in the prior-year quarter.
Its adjusted net loss from continuing operations for the same quarter stood at $25.74 million compared to adjusted net income from continuing operations of $7.56 million for the prior-year quarter.
In addition, its total current assets stood at $33.06 million as of December 31, 2022, compared to $100.60 million as of December 31, 2021.
Analysts expect GREE’s EPS to come in at negative $0.08 million for the fiscal second quarter ending June 2023. For the same quarter, its revenue is expected to decline 39.7% year-over-year to $18.90 million. Moreover, GREE failed to surpass consensus EPS estimates in three of the trailing four quarters.
GREE’s shares have plunged 91.9% over the past year and 42.1% over the past six months to close its last trading session at $0.66.
GREE’s POWR Ratings reflect its bleak prospects. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
GREE is rated an F for Growth, Stability, and Quality and a D for Value. It is ranked #96 within the 101-stock F-rated Financial Services (Enterprise) industry.
Click here to see additional POWR Ratings for Momentum and Sentiment for GREE.
Singularity Future Technology Ltd. (SGLY)
SGLY operates as an integrated logistics solutions provider with a focus on servicing steel companies and e-commerce businesses in China and the United States. It offers shipping and other freight-related services; and transportation, warehouse, collection, first-mile delivery, drop shipping, customs clearance, and overseas transit delivery services.
SGLY’s trailing-12-month levered FCF margin of negative 11.49% compares to the 4.31% industry average. Likewise, its trailing-12-month ROCE and ROTC of negative 53.68% and 26.88% compare to the industry averages of 13.67% and 7.05%, respectively.
SGLY’s total operating expenses increased 44.7% year-over-year to $3.87 million for the fiscal fourth quarter that ended December 31, 2022. Net loss attributable to controlling shareholders of the company for the same quarter stood at $3.73 million, while loss per share came in at $0.18.
In addition, its total current assets stood at $37.51 million as of December 31, 2022, compared to $63.17 million as of June 30, 2022.
The stock has declined 88.7% over the past year and 65.7% over the past six months to close its last trading session at $0.73.
SGLY’s bleak prospects are reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
SGLY is also rated an F for Growth, Value, Stability, and Quality and a D for Sentiment. It is ranked last in the 18-stock Air Freight & Shipping Services industry.
One can see additional POWR Ratings for Momentum for SGLY here.
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LICY shares were trading at $5.27 per share on Tuesday morning, down $0.07 (-1.31%). Year-to-date, LICY has gained 10.71%, versus a 8.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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