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3 Stocks to Avoid This Week

3 Stocks to Avoid This Week

Posted On June 22, 2020 12:02 pm
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I took a look at three stocks to avoid last week, and that basket of short-term calls went fairly well. The three stocks declined by an average of 11%, a sharp contrast to the market’s 2% climb. It was a matter of one stock plunging 39% with the other two keeping pace with the market, but a win is a win.

Let’s try this again. I see DraftKings (NASDAQ:DKNG)Darden Restaurants (NYSE:DRI), and Norwegian Cruise Line (NASDAQ:NCLH) as vulnerable investments in the near term. Let’s see why I think these are three stocks to avoid this week.

DraftKings

The popularity of online wagering for sports in general and fantasy sports in particular is booming, and that has made DraftKings a speculative winner since going public as a reverse merger two months ago. The stock more than doubled last month, and it’s been inching higher in June.

The problem here, of course, is that there is a void of sports programming to bet on through either DraftKings Sportsbook or its signature fantasy sports platform. The NBA is set to resume its abridged season at Disney World by the end of next month, but with Florida COVID-19 cases on the rise — and any kind of outbreak within the complex likely derailing the season — are you as comfortable betting on DraftKings as you are through DraftKings?

DraftKings may not be so keen on betting on itself. It boosted the size of a secondary offering to 40 million shares priced at $40 last week, and nearly half of those shares came from earlier investors cashing out their chips.

Darden Restaurants

One of the more intriguing companies posting fresh financial results this week will be Darden Restaurants. The parent company behind Olive Garden, LongHorn Steakhouse, and a half-dozen other concepts is a bellwether for the casual dining industry, and it happens to be the first major player to report quarterly results since the pandemic has had a few months to marinade into the new normal.

Analysts are bracing for a huge loss on a 45% plunge in revenue for the fiscal quarter ending in May. It won’t be pretty. Darden’s restaurants tried to honor takeout and third-party delivery apps during the disruption, but even now with eateries gradually reopening with social distancing safeguards across the country, it’s not business as usual.

Darden Restaurants suspended it… Continue reading at The Motley Fool

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