Why Groupon Inc (GRPN), Restoration Hardware Holdings Inc (RH) and Vale SA (ADR) (VALE) Are Three of Today’s Worst Stocks

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With no major economic news to inspire them, traders decided the two-week rally had run its course and now was a good time to start taking profits. When all was said and done on Thursday, the S&P 500 closed at 2,115.48, down 0.17%. Even so, that close was still above the day’s low of 2107.73, suggesting at least a few bulls remain waiting in the wings.

Why Groupon Inc (GRPN), Restoration Hardware Holdings Inc (RH) and Vale SA (ADR) (VALE) Are Three of Today's Worst StocksWhatever the case, plenty of stocks ended Thursday deep in the red. They include Groupon Inc (NASDAQ:GRPN), Restoration Hardware Holdings Inc (NYSE:RH) and Vale SA (ADR) (NYSE:VALE).

Here’s why.

Groupon Inc (GRPN)

Relatively new Groupon CEO Rich Williams is finding the honeymoon is more than over, with frustrated GRPN owners sending the stock 6.3% lower following news that Wedbush recommends investors steer clear of the struggling e-commerce company … at least for the time being.

To be clear, Wedbush doesn’t hate Groupon. In fact, it has faith in the organization’s growth strategy. The analytics outfit is concerned, however, GRPN shares will remain range-bound at least until 2017, as all the headache and hassle of a major restriction are worked out, and the company starts to focus on its core competencies and markets.

That said … Wedbush is hardly alone in its lack of optimism for Groupon. The average analyst opinion on GRPN at this time is leaning just a bit to a sell rating, and the average price target is right at $4.00.

GRPN closed at $3.26 today.

Restoration Hardware Holdings Inc (RH)

Home-decor retailer Restoration Hardware Holdings dropped a bomb on RH shareholders today, booking a first-quarter loss when it was expected to post a profit.

All told, Restoration Hardware reported a loss of five cents per share for the usually slow first quarter of the year. Analysts had modeled a profit of 5 cents per share of RH. Even worse, the retailer dialed back its full-year profit expectation from around $2.72 per share to a range of only $1.60 and $1.80 per share.

Raymond James analyst Budd Bugatch commented on the results:

“We are downgrading Restoration Hardware to Market Perform from Strong Buy following Restoration Hardware’s F1Q16 results, video presentation, and management conference call. While we continue to believe that the Restoration Hardware business model is not broken and that the RH valuation is not now overly expensive, the near-term headwinds are stronger and longer-lived than we originally anticipated. Accordingly, sales and margins will likely continue to face pressure and FY16 is setting up to be a significant transition year, before “reaccelerating” in FY17. As a result, our investment thesis of improved operating performance in F2H16 is no longer intact, thereby elevating the near-term risk and forcing us to the rating sidelines (admittedly with some egg on our face) in the interim as management works through its challenges and executes its transition.”

RH closed down 21% for the day.

Vale SA (ADR) (VALE)

Last but not least, don’t look for a company-specific reason Vale shares fell more than 8% on Thursday; you won’t find one. In fact, the only recent news from or about the company came yesterday, when it said it had no intention of replacing its CEO … an indirect sign of stability.

Rather, the reason VALE struggled so much on Thursday is the steep setback commodity prices suffered today. Iron ore prices fell a bit today after the National Australia Bank posted a prediction for a steep decline in prices through next year. All told, the bank believes iron ore prices will retreat from a price near $52 per ton to $40 per ton in 2017, as demand from China continues to wane.

Other major metal miners helped lead the materials sector’s selloff.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/06/groupon-inc-grpn-restoration-hardware-holdings-inc-rh-and-vale-sa-adr-vale-are-three-of-todays-worst-stocks/.

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