I used to enjoy going to a movie theater, ordering popcorn and watching a good film.
Now, the cost is too high and … to be quite honest … there aren’t a lot of movies that interest me anymore.
Plus, streaming services have made watching current movies at home a lot cheaper and more convenient.
While going to the movies is still popular, our Stock Power Ratings system shows that not all movie companies are great investments.
This is the case with AMC Entertainment Holdings Inc. (NYSE: AMC).
AMC’s Wild Meme Stock Journey
A quick look at our Stock Power Ratings system helps you see the real picture of a company.
You might know this stock because of its meteoric rise in 2021 as it became a meme stock among the likes of video game retailer GameStop Corp. (NYSE: GME). (I actually waved the red flag on AMC and other meme stocks back in June 2021.)
AMC soared 390.4% higher in June 2021 — but this company has fallen back to reality just as fast.
The company started in 1920 and grew to operate movie theaters in 11 countries across three continents.
Since the height of the COVID pandemic, AMC’s finances have struggled … to say the least (more on that below).
AMC stock scores a “High-Risk” 2 out of 100 on our Stock Power Ratings system, and we expect it to underperform the broader market over the next 12 months.
AMC Stock: Red Fundamentals With High Volatility
Here is where I usually tell you about impressive company milestones.
Not so much for AMC:
- In its recent quarterly report, the company recorded a net loss of $226.9 million —despite a $200 million increase in total revenues!
- It burned through $179.2 million in cash … before paying any debt or deferred rent payments.
That shows why AMC scores a 17 on growth.
It also scores in the red on our value and quality factors.
AMC has negative price-to-earnings, meaning it can’t keep its financials afloat. It scores a dismal 3 on value.
The company has miserable return on assets of negative 8.1% and a return on investment of negative 6.2%, earning it a 3 on quality.
All of this tells us the stock is wildly overvalued, and its financial bottom line is in terrible shape.
AMC stock has had a rough year, falling 66.7% Its share price is just above where it was before it took off in 2021.
The stock popped more than 40% higher over the last month, but the fundamentals I showed you paint an ugly picture of this company’s future. It’s “High-Risk” in our system for a reason.
Its hospitality services peers dropped an average of 8% over the same time.
AMC stock scores a horrible 2 overall on our proprietary Stock Power Ratings system.
That means we consider it “High-Risk” and expect it to underperform the broader market.
Going to the movies used to be a fun and relatively inexpensive way to enjoy films.
Now, it’s too pricey … and folks are opting to stay at home to watch the latest blockbusters.
A quick look at our Stock Power Ratings system shows that the massive red ink in its ledger makes AMC a stock to avoid.
Stay Tuned: 1 Casino Stock Plays With House Money
I just shared a gambling stock to avoid, and tomorrow I’ll show you the other side of the coin with a “Strong Bullish” casino stock.
It’s established itself in smaller markets and rates in the green on five of six factors in Stock Power Ratings.
Matt Clark, CMSA®
Research Analyst, Money & Markets
P.S. I’d love to hear what you thought about my “Stock to Avoid” article today. Was it valuable? Would you like us to continue sharing high-risk stocks on occasion, so you know what to stay away from?
Would you prefer that we only share “Bullish” and “Strong Bullish” stocks?