The sky-high inflation and the Fed's aggressive stance on it have led the benchmark indices into bear market territory. The S&P 500 has declined 20.4% year-to-date. Moreover, according to Societe Generale, the S&P 500 index is expected to slide another 24% by 2022.
Furthermore, Deutsche Bank Chief U.S. economist Matt Luzzetti believes that the CPI rate will peak at 9% later this year. Also, Deutsche Bank analysts have projected a 3.1% contraction in U.S. GDP in the third quarter of 2023, earlier than its previous estimate.
The market volatility has led to a steep sell-off in the market. But popular stocks Realty Income Corporation (O), Las Vegas Sands Corp. (LVS), and Lucid Group, Inc. (LCID) still look overvalued at their current price levels and could be best avoided, given their bleak fundamentals.
Realty Income Corporation (O)
O is an S&P 500 constituent dedicated to providing stockholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties.
O’s total revenue increased 82.6% year-over-year to $807.34 million for the first quarter ended March 31, 2022. However, its total expenses came in at $608.76 million, up 100.9% year-over-year. Also, its cash and cash equivalents came in at $151.62 million for the period ended March 31, 2022, compared to $258.58 million for the period ended December 31, 2021.
In terms of trailing-twelve-months EV/EBITDA, O’s 24.94x is 26.5% higher than the industry average of 19.71x. Also, its trailing-twelve-months P/S of 12.75x is significantly higher than the industry average of 5.37x.
O missed EPS estimates in each of the trailing four quarters. Over the past month, the stock has lost 2.4% to close the last trading session at $67.99.
O’s POWR Ratings reflect its poor prospects. It has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an F grade for Value and a D for Sentiment. Click here to access the additional ratings for O (Growth, Momentum, Stability, and Quality). O is ranked #27 of 33 stocks in the D-rated REITs - Retail industry.
Las Vegas Sands Corp. (LVS)
LVS and its subsidiaries develop, own, and operate integrated resorts in Asia and the United States. Its properties include the Marina Bay Sands, The Venetian Macao, The Plaza, Four Seasons Hotel Macao, The Londoner Macao, The Parisian Macao, and Sands Macao.
LVS’ net revenues decreased 21.2% year-over-year to $943 million for the first quarter ended March 31, 2022. Its operating loss increased 214.6% year-over-year to $302 million. Moreover, its consolidated adjusted property EBITDA came in at $110 million, down 54.9% year-over-year.
LVS’ forward EV/EBITDA of 25.99x is 224.1% higher than the industry average of 8.02x. Its forward P/S of 4.74x is 464.7% higher than the industry average of 0.84x.
Analysts expect LVS’ EPS to remain negative in 2022. In addition, it missed EPS estimates in three of the four trailing quarters. Over the past month, the stock has lost 5.6% to close the last trading session at $31.58.
LVS has an overall D rating, equating to Sell in our POWR Ratings system. The stock has an F grade for Value and a D for Growth and Stability.
We’ve also rated it for Momentum, Sentiment, and Quality. Click here to access all the LVS ratings. LVS is ranked #26 of 28 stocks in the D-rated Entertainment - Casinos/Gambling industry.
Lucid Group, Inc. (LCID)
Technology and automotive company, LCID, develops electric vehicle (EV) technologies. The company designs, engineers, and builds electric vehicles, EV powertrains, and battery systems.
LCID’s revenue increased by a staggering 18,326.5% year-over-year to $57.67 million for the first quarter ended March 31, 2022. However, its adjusted EBITDA came in at a negative $383.78 million compared with a negative $189.09 million in the prior-year period.
Its non-GAAP free cash flow came in at a negative $679.73 million compared to a negative $313.50 million in the previous period.
LCID’s forward EV/S of 19.54x and forward P/S of 22.03x are significantly higher than the industry averages of 1.03x and 0.84x, respectively.
Analysts expect LCID’s EPS to decline 69.4% per annum for the next five years. Its EPS is estimated to remain negative in 2022 and 2023. The stock has lost marginally over the past month to close yesterday’s trading session at $19.30.
LCID’s POWR Ratings are consistent with this bleak outlook. It has an overall F rating, equating to a Strong Sell in our POWR Ratings system. The stock has an F grade for Value, Stability, and Quality.
We also have graded LCID for Growth, Momentum, and Sentiment. Click here to access all of LCID’s ratings. LCID is ranked #53 of 65 stocks in the D-rated Auto & Vehicle Manufacturers industry.
O shares were trading at $68.20 per share on Friday morning, up $0.21 (+0.31%). Year-to-date, O has declined -3.03%, versus a -18.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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