Anthony Speciale Stock Market Analyst

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Which of these 3 toxic stocks do you own?

Speaker 1 (00:01):
Hi guys, this is Tim Melvin. Welcome back to a better way to wealth. Now, today, I want to talk to you about some stocks that I’ve identified that, you know, they’re pretty popular stocks. People gotten really excited about them, but I think that owning them could actually be basically toxic for your long-term performance. These things are just so mispriced that any one little thing goes wrong. These stocks are going to turn into an absolute disaster and all three of them are case where you can’t just buy the story folks. Cause the stories sound okay on most of these, but the numbers are horrific. So let’s just jump right in here. Our first pick is a company called [inaudible] and the symbol is O L O. Now there’s software as a service company, that’s real hot business right now. And they sell software to restaurants in the United States, multi location restaurants that has restaurants with more than one shop.

Speaker 1 (00:56):
It’s not just for your mom and pop diner down the street. Their software allows customers, customers to order directly from restaurants and then pay for it. Using a kiosk, a digital app on your phone, by voice on your phone obviously, or several other different digital ways of paying for the product. They also have software. Then that manages the delivery of the food. If it’s a takeout order, that’s that’s taken out. And then they have an order and that software that allows you, the restaurant owner to set prices, manage the menu at multiple locations and other tasks like that, that make running the restaurant just a lot easier than having to call the changes in to all of your various locations. Now, although has a pretty cool customer list. I’m going to give them that they’ve got Denny’s. They’ve got Jack in the box, GrubHub, cheesecake factory Wingstop, cracker barrel, and a bunch of other multi chain restaurants around the United States.

Speaker 1 (01:55):
Now not going to kitchen. This is going to be a great business. Okay. Restaurants are going to see a complete change in the workforce, especially casual dining and fast food. As minimum wage laws come in across the United States. Restaurant owners are going to realize, Hey, Hey, you know, if I can do this with a kiosk and some software, they don’t take breaks. They don’t take vacations. They don’t need sick leave and they can work 24 7. All I gotta do is pay for them on an ongoing basis with this software as a service application. So it’s going to be a really good business. Oh, those problem is going to be such a good business. Everybody and their brother is going to want to be in it. Look, you’ve already got wicks. Square is in this business. Par technology is in this business, Oracle, the big monster company, this, you know, software company has a division called Microsystems. That used to be a standalone company that I was very familiar with it. In fact, I owned microsystem at the time of the takeover from Oracle. They’re going to be a huge player in this business and they have a massive installed base that they’re going to be able to sell to. Now this stock recently IPO

Speaker 2 (03:10):
It came out now

Speaker 1 (03:12):
The valuation is ridiculous. It was great, but the valuation is crazy. He’s trading at 40 times, sales guys, 300 times hope for profits. Next year, they’ve got $5.2 billion in market cap and just $130 million in sales, not a sustainable level. Now here’s the real problem that they have. IPO’s have what’s called known as a lockup. So that’s a period of time that insiders officers and directors cannot sell their shares into the open market. After the IPO date. Well, Olo has

Speaker 2 (03:47):
A large 87% of those shares by insiders are going to unlock, okay.

Speaker 1 (03:54):
On Jan on September 8th of this year, I think we’re going to see massive selling because you know, this is a liquidity event for a lot of these insiders. We’ve seen a lot of IPO’s this year as well. Lockups. We’ve seen a lot of selling and it’s created quite a bit of alpha for those who went short to stock. Not suggesting that we do that. I am suggesting however that if you have this stock and you put in your portfolio might want to think about going ahead and taking the gains. If you don’t have it, don’t buy it. If anything goes wrong here, this stuff it’s going to fall by 40 50% in an absolute blink of an eye. Now, my next pick is I can’t believe they pulled this IPO off earlier this year when its company called European waxing center, EWC Z, they own a chain of waxing center across the United States.

Speaker 2 (04:45):
Their pitch has been

Speaker 1 (04:47):
Their entire customer basis. I mean, almost entirely female. They think there’s a massive market, an opportunity offering waxing services meant. I’m not sure. I agree with that. I did all there may be some business to be had. I do not. However, believe that it’s a massive opportunity. So this company has 107 million sales one and a half billion in market cap. They are not profitable. I do not know. I expect them to be profitable anytime soon. This is 14 times sales guys, again, over ridiculous valuation for a business. It’s almost a commodity there’s, you know, waxing centers just about every shopping center across the United States. So I’m not sure how they differentiate themselves. This is a stock guys. They’d pop it on the IPO. It’s pulled back a little bit. If we come back in 12 months in this company’s out of business,

Speaker 2 (05:44):
Frankly, I’m not going to be shocked. Do not put this thing in

Speaker 3 (05:48):
Your portfolio. It’s not just everything has to go, right? Everything has to go perfect

Speaker 1 (05:52):
And beyond and some stuff that makes absolutely no sense has to take place for company to actually see the stock go

Speaker 3 (05:59):
A lot higher. Our final toxic

Speaker 1 (06:01):
Stock folks is a better known company by the name of service. Now, the symbols N O w. And they do workflow software management, and it’s been a popular product. It’s been a hot stock for several years. Now. The stock has provided excellent returns up until now. Now we’re starting to see the fundamentals of the business. You know, just using a nine point yeah checklist, it’s gone from six, a positive score, six down to three, which tells me business is not as good as it used to be. And it’s probably going to get even worse. So growth has dramatically slowing down at this company. On top of that, when I look, I see that just in the past few weeks, insiders have been selling lots of stocks, several multimillion dollar sales by the people running this company. You never liked to see that, especially when there’s more than one, one guy selling stock, he might be building a dream house or, you know, paying for a kid’s wedding or putting a kid through Harvard. It could be a lot of things,

Speaker 4 (07:02):
But three or four of them selling stock. They think

Speaker 1 (07:04):
The stock market not be going that much higher in the near term. I also noticed that service. Now we’re seeing a market slowing and institutional buying in the second quarter. All of these factors tell me that if you own the stock, you probably need to sell it. And if you don’t own the stock, don’t buy it at these levels because if any little thing goes wrong for this company, with the valuation of 80 times earnings in 21 times, sales that’s priced for perfection guys, if they don’t deliver affection. And I don’t think they’re going to this stock could tumble 40, 50, 60% or even

Speaker 3 (07:39):
More, very, very quickly. So anyway, guys, that’s

Speaker 1 (07:43):
A better way for wealth. I’m Tim, Melvin. Thanks for watching.