3 Stocks Beaten Down, But Not Out (Episode 8)

Welcome to The MarketBeat Podcast. I'm your host, Kate Stalter. And in this show, we cut through the noise and give you real market insights from professional investors, traders, asset managers, and analysts, our guests put the market developments in context and give you actionable information to make you a more successful trader or investor let's get started.

Let's go back in time, back to when I was trained to evaluate stocks, when I worked closely with bill O'Neil and the rest of the crew at investors business daily, and that was where I got my start in the investing and stock market business. And I use all that training to this day, looking at both fundamentals and the technical chart action to determine if a stock is a watch list candidate or even a buy. Now, bill O'Neil focuses on growth stocks, which are generally more exciting than value because the growth category includes new techs, info, tech, biotech, financial technology, startups, new IPOs, and others. Now over time, it's true. That value does tend to outperform growth, but that doesn't take away the fact that the growth stocks generally are, frankly, just the more fun ones doesn't mean you wanna avoid value though. Now I do use a lot of screeners, several of which I have developed myself in recent years, and you can definitely enter different parameters to get different values.

For example, if you want small caps with good earnings that are getting moving average support versus an S and P 500 dividend payer that maybe will hold up better in a market correction, very different asset classes right there. So there's really no good reason to limit your stock selection to one particular equity asset class like growth stocks or value stocks explore the entire universe. They tend to behave differently depending on the market cycle or the market condition, and some asset classes go in and out of favor. So it's always a good idea to maintain a wide ranging watch list. In today's episode, you will hear from MarketBeats own Chris maroch, who brought three stock ideas from different industries and different market capitalizations. And he and I discussed some of the pros and cons of these stocks, the fundamentals and the technicals. And as Chris and I were talking, the market was trading lower and he addresses the idea of keeping your watch list current, even during a market downturn, because as we used to say back when I was at I B D the market can turn on a dime and you wanna be ready no matter what happens.

So that's one of our themes today. Give a listen to my conversation with MarketBeats, Chris maroch. So Chris, it's great to have you on the show today. I know you've been looking at a number of different stocks for the articles you've been doing for MarketBeat. What is catching your attention later that you think the listeners today need to know about?

Oh, good. I like it. .

It's actually falling today. I'm looking at it right now, as we're speaking, it's 10, always in 40, 41 cents, we're going back and forth, but around $10 and

Yeah. We actually have a, a 60% year over year decline for the December 21 quarter versus the December 20 quarter. Yeah.

Yeah. Reinvestment will do that, right? Yeah. It often does you see that in a young company, a newly public company, you often will see some choppy earnings as they reinvest, but it is interesting because we've seen very nice, steady double digit revenue growth. Now there is a little bit of a revenue growth deceleration. Chris, I'm seeing that it went from 49%, two quarters ago to 36% to 34% growth. Right? Yeah. So any, any thoughts on what might be up with that? I

And it's not, it's not really down. No,

Yeah. That's exactly right.

I remember this. Yeah.

Yeah. It's interesting because there are definitely some mixed messages here in terms of the institutional buying. I mean, you're absolutely right. That the number of institutions owning the stock has been going up. I was, I was looking at that exactly. As you were mentioning it, in fact. Right. But then with the continued selling, so somebody's selling at the same time. So that, does that make it a little more difficult when there's a little bit of a mixed message going on there? I think

If you had to look at this and say, Hey, this is a watch list stock. What would make this a more compelling buy scenario? What would have to happen in your

Okay. You got some more stocks let's let's turn to the next one. Your list today,

Well, let me ask you this. I mean, I've got Hulu and I've got note problems, streaming live sports on Hulu.

Mm-hmm

Somebody will pick it up for sure.

Okay. And you know, I'm looking at this, they have been growing their revenue correct year over year, went public very recently. Looks like at the end, near the end of 2021 thing about this one, this is a very volatile high beta stock. Chris, it's got a beta of 2.32, which means that it's just insanely volatile relative to the broader market. And it's also a small company. It's a very small cap of market cap. It is just a little bit over a billion and that's, that's very small. So it's kind of got some things going for it and going against it. Doesn't it?

About eight right now. It's

Mm-hmm

Mm-hmm I mean, it really is. It's I'm just looking just technically it's below the key moving averages. It's again, relative to the broader market. This is one of the bottom of the barrel stocks technically right now. But you know, that doesn't mean it can't come back. Right. We all know that. So again, let's go back to your thesis of what might it take for this stock to come back? Would it be better messaging on the, on the sports betting component?

Yeah. So as we're speaking, this is due to report on February 23rd.

Well, would that be only subscribers who are residents of New York? I'm just trying to dig deep into this and see, how is, how is that going to work? It,

Oh yeah. And

Right. Very clunky, very outdated system.

Right. Right. And that makes a lot of sense too. And it, it sounds like this is really one to continue watching. We wanna see how the business case plays out what the, what the sports betting does. And just one to keep an eye on, because like we said, a minute ago, just because something is trading at Lowe's right now, you could take your eye off of one of these things and come back 18 months later. And you're like, how did I miss the run up? Right. Right. If you're not watching it, it happens. Right.

I think you could argue it didn't matter to the meme stock crowd. They still matter to the institutions. Right. Right.

Right. Right.

Right. And I certainly have in the past had some stocks that I own just with the thought that, Hey, this has not panned out yet. Right. And perhaps this is an acquisition target. And I think, honestly, Chris, that could be another exit for this company is that it's just acquired by one of the bigger streaming or sports betting companies.

Right. So you never know, you never know. Right. So it's interesting. It's interesting just to talk about this one, it's certainly nobody here is recommending this today, but it is just an interesting one, right? To look at. So as a trader or investor, you need timely information to help you make better decisions and analyst upgrades and downgrades can give you the outlook for the stocks. You're watching, coming from the big institutions who are behind 75 to 80% of market movements for absolutely no cost MarketBeat will send analyst recommendations, right to your inbox daily, you will get a concise summary of analyst, upgrades, downgrades, and new coverage, along with relevant news and information for the stocks on your watch list. Real time portfolio monitoring tools, a rundown of the top headlines each day, market calendars, the MarketBeat mobile app and other research tools don't miss out on this sign up right now, it's a hundred percent free. You'll find this at marketbeat.com/ratings/newsletter that's marketbeat.com/ratings/newsletter. And that link will be in the show notes. So what else do you got? You got a couple, we have a few more minutes here. Anything else catching your eye today, Chris?

Yeah, it's down pretty significantly today. I have the chart up here. Yeah.

Poor timing. What is that?

Yeah. Yeah. I see what you mean. It did. It's actually that started last year, right. It dropped the rate of revenue growth dropped down pretty significantly in earnings growth as well. So yeah, that did start happening last summer. In fact,

Right. I, I wonder any concern about supply chain issues? I mean, that's one that just when companies report they're, they're continuing to mention that naturally. Do you think there's anything about that that may be factoring in here

But your point is a good one about it's just being dragged down along with the broader market. Right. I mean, I kind of flipped over from home Depot to the S and P 500 and of course it's a component there. Right. And I'm just, I'm kind of looking at this and yeah, the S and P 500 is at the low end of its trading range for the day as well. Right. So you you're right. It's kind of, you know, I don't know what is this, I'm mixing metaphors here, but the storm that sinks all boats, something like that.

Right. Right. And even when Russia is not invading other countries, you

See. Right. But, you know, you often do see a stock that will move lower and then eventually the institutional investors reevaluate, they do some bargain shopping. Right. And you see a, a company with a good outlook that moves higher. And frankly, as you and I both know, it's often the outlook they're looking ahead, not at what happened in the past, but it seems like I'm just kind of reading a little news report about this here. Did I agree with you? I'm not hearing anything other than conjecture, just from what I'm glancing at is kind of some, some wondering whether maybe the home improvement boom is slowing, but, you know, as you said, housing prices are still on fire. Right. Which might suggest that people wanna come in there and do some remodeling, is what happens when you buy a house, you do some remodeling,

And you've also got a case where you've got a stock with a market cap of 329 billion, right. You're typically inherently going to have a little less volatility. It will typically kind of find its own levels because the institutions will continue to support a stock like this and they have to, because it's a major index component. Right. So it's not just some kind of thing that you're gonna see, you know, the index funds can't bail out of this basically

Committed. So there is some, a little bit more just inherent stability in a stock like that. Hey Chris, thank you. You've given us some very interesting names sort of from, from across the board from different industries, different market caps. And I really appreciate your sharing. Some viewpoints with us today definitely gave me some food for thought and I hope the listeners as well.

Hey, let me ask you this one last question before we go, probably the listeners know this, that you're a, one of the contributors on MarketBeat, but how can the listeners find you if they wanna read your work, learn more about what you're doing?

All right. Sounds great. Thanks again, Chris. Thank

All. That's a wrap on this week's episode. Thank you so much for listening. Don't forget to subscribe. So you don't miss a single episode. You'll find the show on all your favorite podcast apps, Spotify, Stitcher, Google, Apple Podcasts, of course, anywhere else you get your Podcasts and you can always find us on market.com. And please, if you're enjoying the timely market insights, we're bringing you each week and finding them valuable. Please give the show a five star rating on Apple Podcasts that will help others find the show so we can bring these investing ideas to an even wider audience.