2 Beaten-Down Stocks to Avoid Right Now
Don't catch a falling knife.
When it comes to investing, buying a stock that has significantly underperformed major equities only makes sense when there are compelling reasons to believe it will rebound and outperform in the long term. However, there are instances when it's wise to steer clear of companies with bleak prospects and limited hope for a turnaround. This brings two healthcare firms to the forefront: Teladoc Health (NYSE:TDOC) and Recursion Pharmaceuticals (NASDAQ:RXRX).
Both of these companies have witnessed a substantial decline in market value over the past few years. Nevertheless, their current predicament makes them undesirable investment options. To illustrate, Teladoc, a telemedicine pioneer, has faced considerable challenges since its pandemic surge. The company has encountered intense competition, leading to subpar financial results. This is particularly evident in its BetterHelp virtual therapy service, which once drove significant growth but now appears to be faltering.
Earlier this year, there were hints that Teladoc might be on the path to recovery. The company was gaining ground in expanding health insurance coverage for BetterHelp, a move it hoped would stimulate demand and revenue. However, this does not negate the company's current status as a stock to avoid. Similarly, Recursion Pharmaceuticals, a biotech firm, has also seen its share price plummet.
The reasons behind its decline are not explicitly mentioned in the source, but like Teladoc, it is deemed unsuitable for investment at this time.
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