Top Stocks To Short As Coronavirus Fears Grow With Market Rally

Stock markets have seemed overextended for a while now, but that doesn’t mean they cannot keep going. However, last Thursday’s brutal session where the major indexes lost over 5% in a day was a stark reminder that volatility is always around the corner. There were some positive economic points this morning, with retail sales surging a record 18% in May, however the level of retail sales was still well below the pre-pandemic purchases. If you’re looking for some names to short or to hedge your portfolio from upcoming risk events, such as a second wave of coronavirus-related shutdowns or the Presidential election, our deep learning algorithms have utilized Artificial Intelligence (“AI”) technology to identify several below in our Top Shorts today.

 

First on the list is Arcbest Corp, a small-cap logistics operation company. Our AI systems have given factor scores of F in Technical, F in Growth, C in Momentum Volatility, and C in Quality Value to the stock that has lost 16.59% for the year, which doesn’t bode well for future prospects. A look at the top-line growth, revenue grew by only 2.36% over the last three fiscal years with $2988.3M versus $2826.5M three years ago.  Operating income, however, did grow by 41.19% over the last three fiscal years at $76.8M in the last fiscal year compared to $53.9M three years ago. A probable reason why the company is a short here is the shrinking of EPS, which was $1.51 in the last fiscal year versus $2.25 three years ago. ROE is also declining, with a reading of 5.4% in the last year, compared to 9.6% three years ago. Forward 12M Revenue is expected to grow by only 0.21% over the next 12 months, and given it is trading with a rich forward 12M P/E of 24.32, further downside looks more probable.

 

Electrocore Llc is another Top Short today with factor scores of D in Technical, C in Growth, D in Momentum Volatility, and C in Quality Value from our AI technology. The company is a commercial stage bioelectronic medicine company with a platform for non-invasive vagus nerve stimulation therapy, but the stock has lost 36.6% this year already. Revenue did grow by 13.56% in the last fiscal year, and grew by 234.64% over the last three fiscal years, but it was from low levels overall. Revenue was $2.39M in the last fiscal year, compared to $0.81M three years ago. Operating Income grew by 14.88% in the last fiscal year, however it was still negative at $(44.09)M, much worse when compared to $(25.64)M three years ago. A similar story is told by the EPS, which grew by 13.63% in the last fiscal year but was still $(1.54) in the last fiscal year. ROE was also incredibly poor, showing at (99.1%) in the last year after (285.1%) three years ago. The long-term downtrend in price appears to be continuing throughout 2020 for the small-cap company.

 

Next on the list is Fluent Inc, a data-driven digital marketing services company. This is definitely a growth industry, but there is massive competition in the space and the share price fall of 16.53% for the year is only a microcosm of the longer-term decline of the company. Factor scores have been identified from our AI technology of D in Technical, C in Growth, D in Momentum Volatility, and D in Quality Value. Revenue grew by only 4.4% to $281.7M in the last fiscal year, compared to 38.92% over the last three fiscal years. Operating Income grew by 164.71% over the last three fiscal years with a reading of $8.1M compared to a loss of $(11.9)M three years ago. And while EPS grew by 96.55% over the last three fiscal years, it was still negative $(0.02) in the last fiscal year. Compared to the EPS loss of $(0.87) three years ago this is positive, but still losing money. ROE was (0.8%) in the last year compared to the struggling (14%) three years ago. The stock price action over the last several years should tell you all you need to know, and our AI systems think that it is poised to head lower. 

 

Grubhub Inc has been in the news lately as the online takeout food platform recently avoided merging with Uber Eats and elected to merge with Just Eat instead. Our deep learning algorithms thinks that this stock has run too far from the lows, and the financials are backing up the story. For the factor scores, our AI has identified rankings of D in Technical, F in Growth, C in Momentum Volatility, and D in Quality Value for the stock that has gained 29.13% for the year. Revenues are growing, as more people move to online orders, but grew by only 2.99% in the last fiscal year. They did manage to grow by 97.83% over the last three fiscal years, with revenue of $1312.2M in the last fiscal year compared to $683.1M three years ago. Operating income was a different story, coming in at negative $(0.6)M in the last fiscal year, and compares to $99.4M three years ago. That is trending in the wrong direction. The stock is still losing money, with an EPS loss of $(0.2) in the last fiscal year, compared to $1.12 three years ago. ROE was also trending in the wrong direction, with (1.3)% in the last year compared to 9.5% three years ago. Forward 12M Revenue is expected to grow by only 3.52% over the next 12 months.

 

Our final Top Short today is Navidea Biopharmaceuticals, a small-cap biotechnology company specialized in precision medicine. While the stock is up 151.16% for the year impressively, that seems like an overreaction bounce as over the long-term, the stock has struggled to gain ground. Use the recent bounce as an opportunity to get short the company, according to our deep learning algorithms. Factor scores of F in Technical, C in Growth, F in Momentum Volatility, and D in Quality Value do not look attractive. Revenue did grow by 17.32% in the last fiscal year, supporting the stock surge, but it was still only $0.66M in the last fiscal year compared to $1.81M three years ago. Operating Income grew by 16.41% over the last three fiscal years but was still negative, coming in at $(10.96)M in the last fiscal year compared to $(13.39)M three years ago. EPS was a similar story, growing by 13.16% in the last fiscal year but coming in at a negative $(0.76) in the last fiscal year. When you compare the EPS to its $9.28 three years ago, the stock is trending in the wrong direction. Our AI technology thinks the next leg will be to the downside for the stock.