If you haven’t checked out the POWR Ratings recently, you owe it to yourself to take a look. A handful of stocks were recently downgraded to grades of A, indicating they are Strong Sells.
These are stocks that have either seen their fundamentals deteriorate, are trading at valuations that don't correspond to their financial situation, or trending in the wrong direction. Stocks rated a Sell or Strong Sell have shown to underperform, compared to other stocks in our database.
This is why it's bests to avoid them. Below, I will explain why the following stocks have been downgraded: Borr Drilling (BORR), iSun Inc. (ISUN), and Li Auto (LI).
Borr Drilling (BORR)
BORR is an oil and gas drilling business. Based in Hamilton, Bermuda, BORR acquires and operates assets in the oil and gas space. The company is a POWR Ratings disappointment. It has an overall grade of A, which translates into a Strong Sell rating. It has a grade of F in the Quality component along with Ds in the Sentiment, Stability, and Growth components. Click here to find out how BORR grades in the Momentum and Value components.
Of the dozen stocks in the Energy - Drilling industry, BORR is ranked dead last. However, you can find top stocks in this industry by clicking here.
BORR's price returns are in the red across the board. For instance, the company lost 91% last year. The company even dropped 13% in a single day in January on a report that its creditors were considering alternative plans.
If this plan does not come to fruition, a Norwegian bank and a fund in Britain will likely sell, split up, or take over BORR. There is no telling whether BORR will be able to bounce back from the verge of bankruptcy. Savvy investors will stay away or consider shorting BORR.
iSun Inc. (ISUN)
This commercial solar contractor was trading around $16 in April. The stock plummeted down below $8 in May and is now trading around $12. ISUN's 52-week high is $32.24, while its 52-week low is $3.01.
ISUN has an overall grade of F and a Strong Sell rating in our POWR Ratings system. The company has grades of F in the Quality, Sentiment, and Stability components of the POWR Ratings. It also has a Value Grade of D. You can find out how ISUN grades out in the Momentum and Growth components by clicking here.
Out of the 21 publicly traded companies in the Solar industry, ISUN is ranked 15th. Click here to find the top stocks in this industry. The company has lost 8% over the past three months.
Li Auto (LI)
Headquartered in Beijing, China, LI is an electric vehicle innovator. The company makes and sells smart electric sport utility vehicles. The company has an overall grade of F, translating into a Strong Selling rating in our POWR Ratings system. The stock has a grade of D in the Value, Sentiment, Growth, and Stability components. You can find out how LI grades in the Momentum component by clicking here.
Of the 58 stocks in the Auto & Vehicle Manufacturers industry, LI is ranked 47th. Click here to find the top stocks in this industry. LI investors have reason to be concerned as the company's attempt to raise money might cause their share value to dilute. Add in the fact that LI merely has one sport utility vehicle traversing the roads in the "Li one SUV" and investors have all the more reason to be worried.
The bottom line is LI needs money for research and development, meaning cash is necessary. Only time will tell if LI's valuation is justified. Investors should remain on the sidelines until LI's supply chain issues are resolved and the company determines if it will add additional shares to raise cash for continued growth.
Click here to check out our Electric Vehicle Industry Report for 2021
BORR shares were trading at $0.80 per share on Tuesday afternoon, up $0.01 (+1.22%). Year-to-date, BORR has declined -1.74%, versus a 15.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
The post 3 Stocks I Wouldn’t Buy Right Now appeared first on StockNews.com