Earlier this year, Luckin Coffee (NASDAQ:LK) stock was one of the hottest names out there. The coffee chain, touted as China's answer to Starbucks (NASDAQ:SBUX), looked like a solid long-term growth story. But in April, shares tumbled. With an investigation over accounting fraud, investors bailed, sending shares down nearly 76% in one day. Soon after that, Nasdaq halted trading of the company's stock.Source: Keitma / Shutterstock.com Shares resumed trading last month, initially taking another 35% dip. Then, it fell to prices as low as $1.33 per share. Yet, so far this month, investors have ignored the big red flag (accounting fraud), and have dived back into the stock. Since June 1, shares have rallied from around $2 per share to just under $4 per share. And that's after reaching prices above $6 per share on June 5.Simply put, this recent run-up is not indicative of a "turnaround" for this tarnished company. As InvestorPlace's Mark Hake wrote June 9, the recent rally is largely due to short-sellers covering their positions. Once this short-squeeze ends, expect shares to fall back to prior lows.InvestorPlace – Stock Market News, Stock Advice & Trading TipsIn short, don't get fear of missing out and buy into this company. With its growth story derailed, and reputation tarnished, expect shares to trek lower over the next few months. Why LK Stock Could Go Lower From HereShares may have fallen more than 90% below their all-time highs. But that doesn't mean bad times are over just yet for LK stock. Why? With the company's 2019 revenue numbers found to be fraudulent, who's to believe any financial results from this company going forward? * 7 Great Biotech Stocks to Buy and Hold Now Sure, the company has "cleaned house," and Luckin's former chairman is now facing criminal charges. But this is all too little, too late. Without any trust in the company's financial statements, there's no reasonable way to determine its underlying value. Forget about "overvalued" or "undervalued." For now, the company's value is a big question mark.In short, investors buying shares now are essentially buying a lottery ticket. If the company manages to ride out this scandal, shares could bounce higher, albeit far below where they were before the scandal broke.But, more likely, the stock is headed towards penny stock status. Why? It's likely to be delisted from the Nasdaq permanently. Once that happens, shares could, in theory, trade on the over-the-counter (OTC) market. Yet, with institutional and retail investors typically avoiding OTC stocks, demand for shares is going to take a big hit.Granted, the Nasdaq delisting is still pending. Luckin has requested a hearing before an exchange panel. This panel has 30 to 45 days after the request to convene. With the company pursuing this "Hail Mary" in mid-May, that means in just a few weeks we'll know whether shares continue to trade on a major exchange.This may also explain why shares haven't cratered just yet. But, with the odds firmly against LK stock, buying now on the hopes its Nasdaq listing continues looking like a gamble not worth taking. Don't Bet on a Surprise from Luckin CoffeeChances are LK stock falls to even lower prices than where it is today. Yet, there is still a slight chance the company rides out this scandal, and retains some value. As our own Ian Bezek wrote June 10, with the company's secondary offering earlier this year, they may still have plenty of liquidity. While prior sales figures were inflated, they still have a substantial presence, and generate hundreds of millions in sales.Now, don't take that to mean Luckin still has a shot at unseating Starbucks as China's most popular coffee chain. What I'm saying is, there's still a chance the company can pick up the pieces, and turn what's left into a profitable business.But, this still isn't enough to go out and buy this stock today. The risk/return proposition remains out of your favor. Until we see revised financials, we remain in the dark. For now, it's still uncertain whether shares today price in a turnaround, or if they trade far below their potential value if a full recovery happens. Forget About Buy, Sell, or Hold, LK Stock Is an 'Avoid'Speculators may have made easy money trading this stock as of late. But, don't take that to mean this is a screaming buy. At any price. With the big red flag of fraud tarnishing their reputation, there's no good reason to buy Luckin Coffee's stock right now.Firstly, due to the risk of delisting. If shares no longer trade on the Nasdaq, expect them to fall to much lower prices. Secondly, even if the company manages to bounce back from this scandal and become a profitable business, we don't know whether today's stock price reflects this upside potential or not.In short, there's still a lot to lose, and little to gain, with LK stock. Forget about "buy," "sell" or "hold." This stock is an "avoid," pure and simple.Thomas Niel, contributor to InvestorPlace, has written single-stock analysis since 2016. As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * Top Stock Picker Reveals His Next 1,000% Winner * The 1 Stock All Retirees Must Own * Look What America's Richest Family Is Investing in Now The post Avoid Tarnished Luckin Coffee With Shares Bound to Head Lower appeared first on InvestorPlace.
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Investors have been looking for companies that are getting through the novel coronavirus without taking a major hit. And sure, there's value in a good high-quality defensive stock. But don't sell yourself short — there are great opportunities to go on the offense in this market as well. For example, look at Micron (NASDAQ:MU) stock.Source: Casimiro PT / Shutterstock.com The semiconductor memory developer is shaping up to be a big beneficiary of the economic ripples that the new vius has caused. Many investors are sleeping on Micron as a social-distancing play. Micron doesn't have the flashiest products when it comes to work-from-home trends. But its offerings are essential to powering several of the current technological megatrends that are transforming American life.Micron is also under the radar because it last published earnings results on March 25 for a quarter that finished in February. Thus, it hasn't put out any quarterly results since the Covid-19 crisis started to wreak havoc on the global economy. Further to that point, Micron is not scheduled to deliver its next earnings report until June 29. Fortunately, Micron gave an early indication of what next quarter's results are going to look like.InvestorPlace – Stock Market News, Stock Advice & Trading Tips Micron Is a Stay-At-Home WinnerBack in March, I urged subscribers to get long Micron. At the time, while the market was still panicking, I pointed out the silver lining for Micron, writing that: "The coronavirus could help boost semiconductor demand. Almost every commercial or recreational activity that eliminates or reduces human interaction relies on semiconductors." * 7 Great Biotech Stocks to Buy and Hold Now And in fact, this is precisely what has played out. Spaces like video games and online video conferencing have been among the market's biggest gainers. As the market has woken up to the economic effects of the virus, stocks like Zoom Video (NASDAQ:ZM) have soared. But don't forget that in order to power all that increased computing, you need more chips and more memory. That's where Micron comes into the picture. A Huge Guidance IncreaseLate last month, Micron confirmed my hunch: Demand is way up. The company filed a regulatory document that provided investors with updated guidance. And the numbers were sizzling.Micron raised its expected revenue for the quarter from a range of $4.6 billion-$5.2 billion to a new range of $5.2 billion-$5.4 billion. In other words, the old top-end estimate became the new bottom-end estimate. And if we were to use the midpoints of these two forecasts, the company boosted its guidance by $400 million, up from $4.9 billion to $5.3 billion.Even more impressively, the company revealed that it expects to drop more than half of this revenue boost down to the bottom line and increase non-GAAP earnings by about $250 million more than it had forecast previously.How will this translate to earnings per share? The company's prior guidance called for the current quarter's EPS to come in around 55 cents. The updated guidance anticipates a jump to at least 75 cents. If Micron sees this sort of demand continue through the full year, a 20-cent-per-share quarterly boost would cause a massive lift in forward earnings expectations. Analysts Give the Thumbs-UpIn the wake of that guidance increase, numerous Wall Street analysts rushed to boost their outlooks for guidance. For example, Bank of America's Simon Woo. He raised his price target for MU stock to $70, noting "stronger chip demand for the remote-work economy."Evercore ISI's C.J. Muse raised his price target to $75 and stated, "The update is a clear positive for Micron, with memory trends holding up amidst COVID-19 pressure and exceeding investor expectation on growing concerns over falling spot memory prices." Additionally, Raymond James analyst Chris Caso reiterated a "Strong Buy" on Micron stock and a $60 price target.Caso's price target is easily achievable. I see Micron's guidance news as being the sort of thing that could help power MU stock to $60 and beyond. In fact, Micron shares rose from $45 to $55 in the days following the guidance boost, though they've slipped back a bit with the recent market volatility. MU Stock VerdictObviously, in this uncertain and volatile virus-constrained economy, investors must be cautious about extrapolating one moment's success too far into the future. We've seen how suddenly conditions can swing from good to bad. That said, this news from Micron was not just good, but very good. This is exactly the type of catalyst that should power Micron up to those $60-$75 price targets.The company is likely to report blowout numbers this quarter. With the economy starting to reopen, a lot of industrial demand is starting to come back online as well. As such, I'm expecting the company to continue building on this momentum.Eric Fry is an award-winning stock picker with numerous "10-bagger" calls — in good markets AND bad. He's found 40-plus 1,000% or higher stock market winners/"10-baggers". He beat 650 of the world's most famous investors (including Bill Ackman and David Einhorn) in a contest. And today Eric is revealing his next potential 1,000% winner/"10 bagger" for free, right here. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * Top Stock Picker Reveals His Next 1,000% Winner * The 1 Stock All Retirees Must Own * Look What America's Richest Family Is Investing in Now The post Why You Should Buy Micron Stock Ahead of Earnings appeared first on InvestorPlace.
Under Armour joins the emerging coronavirus mask market.