7 F-Rated Tech Stocks Not Worth a Single Cent
Tech stocks appear to be a no-lose bet in this market. But you would be wrong if you think you can pick up any tech stock and enjoy your gains. There are, unfortunately, plenty of F-rated tech stocks of which you need to give a wide berth.
True, the tech-heavy Nasdaq composite continues to outperform the greater market. And tech stocks, in general, continue to be big winners as we head into March 2024. But not every stock is a winner.
You can ensure you’re avoiding the worst of the worst in the tech sector by checking names against the Portfolio Grader – the free tool that evaluates all stocks in the market based on analyst sentiment, momentum, earnings performance and growth.
Stocks that are obvious buys get an “A” rating and the bottom of the barrel earns an “F.” Everything else is in between.
There’s nothing wrong with wanting to expand your horizons and looking for some out-of-the-way names to try to score in the tech sector. But you must avoid these F-rated tech stocks – because they’re not worth your time.
AXT (AXTI)
AXT (NASDAQ:AXTI) makes compound semiconductor wafer substrates, which is the base material used to make photonics and wireless devices. Its products are meant to be used in consumer devices, automobiles, telecom infrastructure, data centers and items to power the Internet of Things.
But the company hasn’t been selling enough to win over Wall Street. AXTI stock was down 50% in the last year until the company’s fourth-quarter earnings report indicated some signs of life.
Revenue for the quarter was $20.4 million, down from $26.7 million a year ago. And AXT recorded a loss of $3.7 million and 9 cents per share a year after a profit of $1.49 million and a gain of 3 cents per share.
But investors sent the stock up more than 100% in a week after CEO Morris Young said that the semiconductor market was beginning to recover.
That may be so. But there are much better semiconductor stocks you can buy than AXTI, which still gets an “F” rating and a bearish outlook in the Portfolio Grader.
Himax Technologies (HIMX)
Himax Technologies (NASDAQ:HIMX) is a fabless semiconductor manufacturer headquartered in Taiwan. Fabless chips are used for smartphones, computers, medical devices and other electronic devices.
Specifically, Himax designs and makes display driver integrated circuits (ICs) that are responsible for image quality and functionality. Himax products are also used in TVs, tablets and automotive displays.
While the market for generative AI has been through the roof recently, there’s much less demand for semiconductor chips for smartphones and computers. That directly impacts the bottom line at Himax.
Revenue in the fourth quarter was $227.6 million, down from $262.2 million a year ago. Profits fell from $41.9 million and 24 cents per share a year ago to $23.2 million and 13 cents per share in the fourth quarter of 2023.
HIMX stock is down 28% in the last year and gets an “F” rating in the Portfolio Grader.
SolarEdge Technologies (SEDG)
SolarEdge Technologies (NASDAQ:SEDG) is a green energy company that makes power optimizers and inverters to help solar panels operate more efficiently.
Unfortunately for those investors, solar stocks were a bad investment in 2023. Higher labor costs, regulatory changes and rising interest rates made solar power an unappealing option in 2023. And even as interest rates look like they will fall in 2024, it will take some time for companies like SolarEdge to regain their momentum.
Earnings for the fourth quarter were ugly. Revenue of $316 million was down from $890.7 million a year ago. The company posted a net loss of $162.3 million, a year after posting a profit of $20.8 million.
While SolarEdge still managed to turn a $34.3 million profit in 2023, I’m not liking how it sits in early 2024. It’s best to avoid this stock.
SEDG stock is down 78% in the last year and gets an “F” rating in the Portfolio Grader.
Cambium Networks (CMBM)
Cambium Networks (NASDAQ:CMBM) offers fixed wireless services and Wi-Fi to broadband service providers.
However, the company has seen significant headwinds in recent months, including reduced revenue for its Point-to-Multi-Point business, lowered orders, discounting, high stock rotations, and other economic challenges.
Revenue in the fourth quarter was $40.2 million, down a whopping 52% from a year ago. The company also posted a net loss of $39 million for the quarter versus a profit of $10 million in the same quarter a year ago.
Cambium is forecasting revenue between $43 million and $48 million for the first quarter of 2024 – a high bar to hurdle. Investors aren’t taking the bait, as CMBM stock is down nearly 80% in the last year.
Cambium gets an “F” rating in the Portfolio Grader.
Ubiquiti (UI)
Ubiquiti (NYSE:UI) is a New York-based manufacturer of high-performance networking technology products. It says it’s worked in more than 200 countries and territories worldwide to provide Internet access and unified information technology management.
But the company is suffering through a slowdown in business. In the second quarter of fiscal 2024, the company disclosed that the Europe, Middle East and Africa region saw an 11% drop in revenue, while the Asia-Pacific region experienced a 24% drop.
Overall, revenue in the fiscal second quarter of 2024 was $465 million, down from $493.6 million a year ago. Profits of $177.6 million are down from $197.6 million last year, and earnings of $1.38 per share dropped from $1.87 per share a year ago.
While Ubiquiti offers a dividend yield of 2%, investors aren’t willing to put up with the losses you get by holding the stock. UI is down 54% in the last year and gets an “F” rating in the Portfolio Grader.
SunPower (SPWR)
We have already established the market was weak for SolarEdge. So, not surprisingly, other solar stocks were also hit hard in 2023, and among those is SunPower (NASDAQ:SPWR).
The California company reported revenue of $356.9 million in the fourth quarter, down from $497.9 million a year ago. IT also posted a net loss of $123.8 million and a loss of 71 cents per share, a year after posting gains of $3.4 million and 2 cents per share.
There’s been plenty of turmoil. SunPower failed to file its third-quarter results on time, which resulted in it breaching a key contractual term that could allow lenders to recall loans totaling $65.3 million. SunPower had to acknowledge that it could stay in business if that happened.
That led to a shakeup in the C-suite. CEO Peter Faricy stepped down on Feb. 26, and a committee led by new Board Executive Chairman Tom Werner is now calling the shots – at least until the company finds a new leader.
All in all, SunPower is a mess that should be avoided. The stock is down 78% in the last year and gets an “F” rating in the Portfolio Grader.
Emeren Group (SOL)
That brings us to Emeren Group (NYSE:SOL), another F-rated tech stock that, not surprisingly, operates in the solar industry.
Emeren is a solar project developer and operator in Asia, Europe and the United States. Its projects in the U.S. include utility-scale green energy and solar projects in California, Illinois, New York and Pennsylvania.
The company has a strategy of targeting locations with government-friendly policies for green power. But with the headwinds the solar industry faced in recent months, not even a targeted approach can help SOL stock.
Revenue in the third quarter was $13.9 million, a steep drop from a year ago when it recorded revenue of $23.9 million.
The quarter-over-quarter comparison is even worse – a drop of 59%.
The company lost $9.4 million in the quarter, or 2 cents per share, compared to a loss of $1.1 million in the same quarter a year ago.
With losses accelerating, this is the time to drop SOL stock. Emeren is down 54% in the last year and gets an “F” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
