Characterized by popularity, momentum, and high short interest, meme stocks have attracted much investor attention since the beginning of the year. However, since most meme stocks possess weak fundamentals, it…

Characterized by popularity, momentum, and high short interest, meme stocks have attracted much investor attention since the beginning of the year. However, since most meme stocks possess weak fundamentals, it could be risky to bet on them based solely on their price performance. As such, we believe investors are better off avoiding meme stocks Beyond Meat (BYND), Virgin Galactic (SPCE), and Clover Health (CLOV). These stocks are rated ‘Strong Sell’ in our proprietary rating system. Read on. shutterstock.com – StockNews Following the massive short squeezes experienced by GameStop Corporation ( GME ) and AMC Entertainment Holdings ( AMC ) earlier this year, meme stocks gained immense popularity. While discussion on social media led to many other fundamentally weak stocks witnessing skyrocketing price rallies, meme trading has attracted criticism from several analysts. In addition, allegations of a fraudulent trading scheme made by the U.S. Securities and Exchange Commission (SEC) has created some wariness and confusion related to investing in meme stocks.

The meme investing trend is still causing hedge funds’ conniptions. Hedge funds have lost billions of dollars in a battle for market supremacy with retail investors this year. Given that most meme stocks are overpriced, and it’s almost impossible to identify when to buy or sell them, we think investors should be judicious when picking a meme stock.

We believe meme stocks Beyond Meat, Inc. ( BYND ), Virgin Galactic Holdings, Inc. ( SPCE ), and Clover Health Investments, Corp. ( CLOV ), which possess weak fundamentals and growth prospects, are best avoided now. These stocks have been rated ‘Strong Sell’ by our proprietary rating system.

Beyond Meat, Inc. ( BYND )

BYND in El Segundo, Calif., offers plant-based meat and products. The company operates under the Beyond Meat; Beyond Burger; Beyond Sausage; the Caped Steer Logo; The Cookout Classic; The Future of Protein, and various other segments. It operates through approximately 122,000 retail and foodservice outlets across grocery, club, natural retailer channels, and other food-away-from-home channels, including restaurants.

BYND’s total operating expenses increased 57.7% year-over-year to $65.95 million in its second fiscal quarter, ended July 3, 2021. The company’s loss from operations grew 127.8% from its year-ago value to $18.6 million. Its net loss rose 92.6% from its year-ago value to $19.65 million. Also, the company’s loss per share increased 93.8% year-over-year to $0.31.

BYND has failed to beat the consensus EPS estimates in each of the trailing four quarters. The company’s EPS is expected to decrease 88.3% in the current year. Although the stock has soared 5% in price over the past five days, it has lost 24.6% over the past nine months and 42.9% over the past year.

BYND’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

Also, the stock has an F grade for Value, Sentiment, and Quality. We’ve also graded BYND for Growth, Momentum, and Stability. Click here to access all BYND’s ratings. BYND is ranked #82 of the 83 stocks in the C-rated Food Makers industry.

Virgin Galactic Holdings, Inc. ( SPCE )

An integrated aerospace company, SPCE in Las Cruces, N. Mex develops, manufactures, and operates spaceships and related technologies for commercial human spaceflight and research and development payloads into space. In addition, the company designs and develops, manufactures, ground and flight tests, and executes post-flight maintenance of spaceflight vehicles.

Last month, a class-action lawsuit was filed in federal court against SPCE on behalf of purchasers of the company’s securities on allegations of violations of federal securities laws. This action could negatively impact the company’s share price in the near term.

During the second quarter, ended June 30, 2021, SPCE’s operating loss increased 17.2% year-over-year to $73.9 million. The company’s net loss grew 30.7% from its year-ago value to $94.04 million. Its total comprehensive loss rose 30.7% from the prior-year quarter to $94.06 million. Also, the company’s loss per share increased 14.7% year-over-year to $0.39.

SPCE’s EPS is estimated to decline 20% in the current year. The company has failed to surpass the consensus EPS in three of the trailing four quarters. Its stock has fallen 37% in price over the past three months and 34.2% over the past nine months.

SPCE’s poor prospects are also apparent in its POWR Ratings. […]

source 3 Meme Stocks to Avoid in Q4 According to the POWR Ratings

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