Although today we saw a rebound, the market has been recently sliding away from the highs it set in early September. If the market continues to turn bearish, it’s wise for investors to avoid stocks with weak fundamentals, such as NIO (NIO), AMC Entertainment (NYSE:AMC), Virgin Galactic (SPCE), ContextLogic (WISH), and Sundial Growers (NASDAQ:SNDL), which have lost more than 25% over the past few months.Despite witnessing a strong economic recovery in the first half of the year, factors like the resurgence of COVID-19 cases, rising inflation, a troubled infrastructure bill, the debt ceiling, and supply chain constraints have caused immense market uncertainty. As a result, September was the worst month for major U.S. benchmark indexes since March 2020.
During this uncertain time, it’s wise to stay away from overvalued stocks. Retail investor favorites NIO Inc. (NIO), AMC Entertainment Holdings, Inc. (AMC), Virgin Galactic Holdings, Inc. (NYSE:SPCE), ContextLogic Inc. (WISH), and Sundial Growers Inc . (SNDL) are still trading at lofty valuations, which is why I recommend that investors avoid buying the dips in these stocks.
Today I’ll analyze each of these five stocks, which are each down more than 25% over the past three months, to illustrate why I believe investors should think twice before adding them to their portfolios.