4 Stocks to Consider Shorting This Month

Despite a rally today in the market, the S&P 500 posted it’s worst month since March 2022.  The Dow and Nasdaq experienced terrible months, down 3.3% and 8.9%, respectively. Shorting, or short-selling, is a speculative trading strategy in which a trader opens up a…

short position by borrowing shares of a company, betting on its unprofitability, or a price decline, which allows the trader to buy them at a lower price for a profit. According to data from the financial analytics firm S3 Partners, the stock market’s slide at the start of this year led short-sellers to gain $114 billion in realized and unrealized gains as of January 21.

That’s why today we’re highlighting 3 stocks from our Top 10 Short screen, which is just 1 of the 10 outperforming screens in our POWR Screens 10 service (more on that below).  Given the possibility of further market corrections, Peloton Interactive, Inc. (PTON – Get Rating), Cronos Group Inc. (CRON – Get Rating), Blink Charging Co. (BLNK – Get Rating), and Vinco Ventures, Inc. (BBIG – Get Rating) could be ideal candidates to short, as they are trading at lofty valuations, despite possessing weak fundamentals.

Peloton Interactive, Inc. (PTON – Get Rating)

PTON is an interactive fitness products provider operating in North America and globally. The company’s offerings include connected fitness products with touchscreen for on-demand classes and connected fitness subscriptions for users.

On December 31, The Schall Law Firm, a shareholder rights law firm, reminded investors of a class-action lawsuit against PTON. The complaint alleges that the company had made false and misleading statements regarding its inventory levels and maintaining appropriate inventory to meet demand and strong business results after the COVID-19 pandemic. The company is also under investigation by several other law firms.

PTON’s forward EV/Sales multiple of 2.17 is 70.3% higher than the industry average of 1.27. In terms of its forward Price/Sales, the stock is currently trading at 2.00x, 88.9% above the industry average of 1.06x.

For the fiscal first quarter ended September 30, PTON’s total operating expenses increased 139.6% year-over-year to $622.40 million. Net income decreased 642.6% from the prior-year period to a negative $376 million, while net income per share attributable to common stockholders came in at a negative $1.25, down 725% from the same period the prior year.

The consensus EPS estimate of a negative $2.90 for the fiscal year 2022 indicates an 866.7% year-over-year decrease.

The stock has declined 82.3% over the past year and 78.3% over the past six months to close Friday’s trading session at $25.64.

PTON’s POWR Ratings reflect this bleak outlook. The stock has an overall rating of F, 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.

PTON has a Growth, Stability, Sentiment, and Quality grade of F and a Value grade of D. In the 66-stock Consumer Goods industry, it is ranked #65. The industry is rated D. Click here to see the additional POWR Ratings for PTON (Momentum).

Cronos Group Inc. (CRON – Get Rating)

CRON, based in Toronto, Canada, is a cannabinoid company that engages in manufacturing, marketing, and distributing hemp-derived supplements and cosmetic products. The company also operates in the cultivation, manufacturing, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets.

On December 31, The Schall Law Firm announced that it was investigating CRON for securities laws violations. The investigation focuses on whether the company made false or misleading statements or failed to…

 

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