My 'Stinky Six' stocks to avoid

In my presentation at the annual Stansberry Conference & Alliance Meeting in Las Vegas last week, I highlighted six stocks to avoid... I've labeled them the "Stinky Six."

To be clear, I don't recommend that anyone short these – or any – stocks. Shorting is just too hard and too dangerous. My advice is to simply avoid them.

This basket of stocks follows in the footsteps of four others I've shared with my readers in the past...

1) I named eight "Bankruptcy Bubble" stocks on June 9, 2020:

• Extraction Oil & Gas
• Chesapeake Energy
• Noble Energy
• Whiting Petroleum
• Valaris (VAL)
• Hertz (HTZ)
• JCPenney
• RTW Retailwinds

I wrote, "Every one of these stocks isn't just likely to decline... They're all ZEROS!"

Sure enough, every one of them filed for bankruptcy. And in each case, except for Hertz, shareholders were completely wiped out.

2) I shared my 25-stock "Short Squeeze Bubble Basket" on January 27, 2021, the very day that meme-stock mania peaked.

Since then, 22 of them have declined – 18 by 80% or more. The average return of all 25 is negative 65%, compared with an 84% gain for the S&P 500 Index:

(Note that I removed formerly bankrupt Hertz – which at the time traded under the ticker HTZGQ – from the list on May 13, 2021. Also note for this table and the others below that prices are adjusted for splits and spinoffs.)

3) On January 4, 2022, I narrowed this group down to the "Dirty Dozen." Here's how I introduced each of these stocks:

• My single least-favorite stock: Digital World Acquisition (DWAC), about which I wrote most recently last week. For the latest on why I think the [U.S. Securities and Exchange Commission ("SEC")] is sure to block this deal, see this Washington Post exposé: Trump's newest business partner: A Chinese firm with a history of SEC investigations
• The two most popular meme stocks, which explains why they haven't yet collapsed – but they will: AMC Entertainment (AMC) and [GameStop] (GME)
• The dumbest meme stock: headset maker Koss (KOSS)
• Why does this money-losing company still exist, much less have a $5.4 billion enterprise value? BlackBerry (BB)
• The two worst electric-vehicle promotions: Nikola (NKLA) and Workhorse (WKHS)
• The three worst alternative energy promotions: Plug Power (PLUG), FuelCell Energy (FCEL), and Ballard Power Systems (BLDP)
• Another obvious promotion: Nano-X Imaging (NNOX) (here are links to three short reports on it)
• A year ago, I wrote this about Freedom Holdings (FRHC): "My friend Roddy Boyd at the Foundation for Financial Journalism recently exposed one of the most obvious promotions I've seen in quite some time – which has a $3 billion market cap! Freedom Holding: After 'Borat,' the Silliest Kazakh Import of the Century."

This basket has an average decline of 60%, while the S&P 500 has risen 44%:

(I removed GameStop on March 23, 2023 and DWAC on April 14, 2023.)

4) I warned my readers about the remaining "Terrible 10" on January 2, 2024. Since then, they're down by an average of 23%, while the S&P 500 is up 23%:

In summary, it's not often that I create baskets of stocks to avoid... But when I do, look out below!

5) With this in mind, here is my current Stinky Six:

1. Palantir Technologies (PLTR): With a $450 billion market cap, it's trading at 107 times this year's revenues and 292 times next year's estimates. I've never seen a mega-cap stock trade at such an extreme valuation. It makes Cisco Systems (CSCO) trading at 180 times earnings at the peak of the Internet bubble look cheap! Palantir is at least four times overvalued, as I explained on August 11.
2. AppLovin (APP): With a $212 billion market cap, it's trading at 38 times this year's revenues and 68 times next year's estimates. Numerous credible short reports allege scammy behavior from this company, as I've reported in numerous e-mails this year.
3. Tesla (TSLA): With its tax-credit expiration in the U.S. and competition from Chinese manufacturers, I expect Tesla's vehicle sales to collapse. I'm also very skeptical that the company's Optimus humanoid robots and the nascent Robotaxi business will take off.
4. QMMM (QMMM): This is the most egregious of the many China frauds in the market today. With virtually no revenue ($1.9 million), it had a $6.8 billion market cap when the Nasdaq halted trading two weeks ago.
5. Signet Jewelers (SIG): The company appears cheap at 11.3 times this year's earnings. But the rise of lab-grown (synthetic) diamonds makes it a value trap, as they're virtually indistinguishable from real ones yet cost as little as one-tenth as much. I analyzed Signet on January 15 and January 16 and shared a video on how synthetic diamonds are made on October 7.
6. Hims & Hers Health (HIMS): The company's growth is driven by aggressively prescribing drugs for weight loss, hair loss, anxiety, depression, etc., after a brief phone consult. Its management and advertising are highly promotional. And at yesterday's close of $47.12, the company has a $10.7 billion market cap, and the stock trades at a nosebleed 81 times this year's earnings.

I will be tracking the Stinky Six using yesterday's close prices and periodically report on its performance.

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.