Wall Street closed out 2023 on fire, moving higher for the final nine trading weeks of the year. But there are still stocks sinking in the rising tide. Last week’s picks — Alibaba Group (NYSE: BABA), Steelcase (NYSE: SCS), and JD.com (NASDAQ: JD) — didn’t fare as expected. They recorded gains of 3%, a slip of 3%, and a rise of 5%, respectively, yielding an average gain of 1.7% for the week. This performance trailed the S&P 500’s 0.3% improvement. Nevertheless, I’ve been right in 70 of the past 114 weeks, amounting to a 61% success rate.
Now, it’s time to conclude this weekly column. While I have no qualms about expressing my inner pessimist and calling out overpriced stocks, short-term predictions have never formed a part of my long-term investment strategy. Moving forward, I will adjust my focus and look at stocks that may struggle over the course of the new year. I foresee Apple (NASDAQ: AAPL), Cal-Maine Foods (NASDAQ: CALM), and Tesla Motors (NASDAQ: TSLA) underperforming in 2024. Let’s delve into my concerns with these three very different investments.
Apple’s Growth Concerns
From a historical standpoint, betting against Apple in 2024 might seem unwise. Since 2012, Apple has experienced alternating fiscal years of double-digit revenue growth and periods of negative or single-digit top-line gains. The company refreshes its flagship iPhone annually, but major updates occur every three years. While some analysts anticipate Apple’s revenue to grow by less than 4% this fiscal year, they expect a modest 6% increase in fiscal 2025.
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While I am a staunch supporter of the Apple ecosystem and hold a small position in the stock, uncertainties loom. Despite Apple’s ability to outperform weak equity markets as a haven of quality and thrive during periods of strong economic growth, the stock’s 49% surge in 2023, amid a slight dip in revenue and net income, makes it challenging to justify paying over 30 times trailing earnings for a slow-growing entity.
Cal-Maine’s Looming Struggles
I have a single short-term prediction for 2024 — Cal-Maine’s challenges. The upcoming financial results of its fiscal second quarter are expected to reveal a 34% year-over-year revenue decline and an 83% plunge in earnings per share. Consequently, the underwhelming financial performance is anticipated to result in reduced variable dividends, painting a bleak future for this egg producer.
Tesla’s Clouded Prospects
Surprisingly, Apple isn’t the most controversial bearish pick this year. As a Tesla owner, I hold a deep affection for the car. However, amidst a more than 100% surge in 2023, the company faced challenges such as decelerating revenue growth and declining profitability. Compounding this, Elon Musk’s various distractions and potential customer dissatisfaction due to longer wait times at charging stations have raised concerns. With the stock market always in flux, the designation of “safe stocks” would unlikely apply to Apple, Cal-Maine Foods, and Tesla Motors.
