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Is Investing in "The DORKs" a Good Idea Right Now?

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13 hours ago

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Is Investing in "The DORKs" a Good Idea Right Now?

Key Points The DORK stocks -- Krispy Kreme, Opendoor Technologies, Rocket Companies, and Kohl's -- are getting attention. Each of these companies is losing money, but trading volume is spiking. 10 stocks we like better than Krispy Kreme › There's a new investing trend out there. Well, perhaps "newish" is the best way to put it, because to my eyes this is just a recycling of the meme stock fad that swept through the markets four years ago. That didn't end well for a lot of people, and I have similar expectations for this one. The stocks feeding into this trend are known as DORK stocks -- an acronym for the stock tickers of Krispy Kreme (NASDAQ: DNUT), Opendoor Technologies (NASDAQ: OPEN), Rocket Companies (NYSE: RKT), and Kohl's (NYSE: KSS). Just as in the meme stock boom of old, some of these companies are seeing wild changes in price and valuation for no good reason. But the trading volume is up as investors' interest is piqued. If the DORK stock name isn't enough to scare you off, then perhaps a closer look at the companies would do it. However -- and I can't stress this enough -- investing in DORK stocks seems to be a really bad idea. If you're itching to try it, here's what you should know. Hype isn't a realistic strategy First, let's take a look at the companies. Krispy Kreme makes great doughnuts, but I'm not willing to say it's a good investment today. Opendoor, which operates a digital platform that allows people to sell their houses, is linked closely to Rocket Companies, which allows people to apply for mortgages and manage their money. Kohl's is a struggling big-box clothing retailer. Krispy Kreme saw first-quarter revenue drop by 15% from a year ago, and posted a loss of $33.4 million and an earnings per share loss of $0.20. Opendoor's Q1 revenue dropped by 2%, to $1.2 billion, and the company posted a net loss of $85 million. Rocket saw its Q1 revenue drop 25% from a year ago to $1.03 billion, and posted a loss of $212 million. And Kohl's saw net sales for the first quarter drop 4.1% to $3 billion. Like other DORK names, Kohl's was in the red for the quarter, posting a loss of $15 million. So, the DORK stocks, at least today, are officially losers. But there are a few meme-type catalysts that are pushing them into the public eye, such as short interest. Rocket and Kohl's both have more than half of their outstanding shares shorted, while Opendoor has more than 30%. All of those numbers are incredibly high. When investors short a stock, they're betting that the price will go down, so there's a lot of money out there betting that these names will drop. Retail investors can lap up additional shares in hope that hedge funds that are betting against a stock will find themselves squeezed and have to sell at a higher price -- similar to the infamous short squeeze of GameStop in 2021. We're back to 2021 I know there are lots of retail investors who enjoyed the 2021 meme stock fad that included names like GameStop, AMC Entertainment, and BlackBerry. I wasn't one of them. In fact, I wrote pretty stridently against investing in meme stocks, because I see it as a sure way of losing money over the long term. When you're trading on pure momentum without a solid underlying business, you're just asking to lose your money. Some of the DORK stocks are already showing major volatility. Kohl's, which normally has a trading volume of 13 million shares, saw 209 million shares traded on July 22. The stock price jumped 120% over a two-day period, but has since lost nearly all those gains. Opendoor became hot when a hedge fund manager put a price target of $82 on the stock, which had been struggling to remain at more than $1 and avoid potentially being delisted from the Nasdaq. Now Opendoor is up 380% in the last month (although at this writing, it still trades for less than $2.50 per share). The stock saw massive trading volume of 1.8 billion shares on July 21 and 1.07 billion shares on July 23. (Its average volume is only 164.8 million shares.) Krispy Kreme's shares haven't been as volatile (probably because the short interest is comparatively low). But it still had more than 152 million shares trade hands on July 23, compared to its average trading day of 8.2 million. Rocket Companies also saw action July 22 and July 23 as more than 51 million shares changed hands each day, versus the company's average trading volume of 15.4 million shares. But the reality is that you can't time the market, and many more people lose money than win trades with meme stocks. Because short-term stock prices are a product of supply and demand, you can't predict how a stock price will move -- and if you guess wrong, you could sustain some big losses. How to invest My advice is to hold back. There are hundreds of better choices than a meme stock, and you should instead be looking for names with good fundamentals, decent profit, and a sustainable business model. But if you are determined to invest in DORK stocks, hedge your bets. Invest responsibly, with only a small part of your portfolio that you are willing to lose. You never want to overplay your hand, particularly with volatile investments -- and those include DORK stocks. Should you buy stock in Krispy Kreme right now? Before you buy stock in Krispy Kreme, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Krispy Kreme wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry and Rocket Companies. The Motley Fool has a disclosure policy. Is Investing in "The DORKs" a Good Idea Right Now? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

2 Bargain Stocks That Could Double Your Money

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2 days ago

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2 Bargain Stocks That Could Double Your Money

Key Points Krispy Kreme offers substantial upside if management can stabilize sales and reduce debt. Lululemon's premium brand positioning in the sports apparel market is significantly undervalued. 10 stocks we like better than Krispy Kreme › Even with the stock market hitting new highs, there are plenty of industries with beaten-down stocks that could benefit from an improving economy over the next five years. Krispy Kreme (NASDAQ: DNUT) stock is down 67% over the past year due to weak financial results, but the stock could soar if management's moves to improve profitability pay off. Lululemon Athletica (NASDAQ: LULU) stock is trading 57% off its recent highs over slowing growth and concerns about competition, but its recent financial results indicate that this brand is in a much stronger position than the market is giving it credit for. Let's dive deeper into why these stocks are underperforming, and why they could at least double from here. 1. Krispy Kreme Shares of Krispy Kreme haven't looked so crispy lately. The stock nosedived earlier this year after delivering disappointing revenue and earnings results. Making matters worse was the announcement that the company would suspend paying dividends to shareholders. But this just reflects the greater problem the company must solve to pay down its debt and shore up profitability. Krispy Kreme reported a loss of $33 million in the first quarter on $375 million of revenue, and revenue was down 15% over the year-ago quarter. It has restructured the leadership, and one of the initiatives is expanding the number of locations where doughnuts can be purchased. Global points of access grew 21% year over year in Q1 to 17,982, and management is aiming to reach 100,000 purchase locations in the future. While opening up more ways for customers to buy doughnuts can help strengthen sales, management is also focused on growing cash flow and paying down debt. The business is saddled with nearly $1 billion in debt and just $18.7 million in cash on its balance sheet. However, the business generated $42 million in cash from operations on a trailing 12-month basis, giving management resources to reduce debt. To strengthen sales, management is reducing reliance on discounting, being more diligent with marketing expenses, and focusing on higher-value options that drive higher margins. On the latter, it is looking to partner with grocery stores and mass retailers like Costco and Walmart's Sam's Club to sell large-volume doughnut packs. The high-volume sales at these locations could generate higher turnover and margins for the company to boost cash flow. Analysts expect Krispy Kreme's annual revenue to reach $2.7 billion by 2029. If the stock trades at a conservative price-to-sales (P/S) multiple of 0.50, that would translate to a 2.5x return from the current $3.13 share price. A sales multiple of 1 would translate to a $16 share price, or 5x return. Krispy Kreme is not a pretty-looking situation, but you have to be willing to buy stocks that no one wants to own to land those elusive multibaggers. There is execution risk here, as there is for any turnaround situation. But if current leadership can stabilize sales and reduce debt, this is a promising turnaround play for a high return in the next four years. 2. Lululemon Athletica Lululemon stock delivered market-beating returns over the last 15 years, as its brand emerged in the mainstream with the leaders in a historically growing industry. Some investors might see Lululemon as being past its prime, but its trailing 12-month revenue of $10.7 billion is still a very small share of the athletic apparel industry. It's got a lot of growth potential that isn't reflected in the stock price. A number of new competitors have emerged over the past decade. Apparel is one of the most competitive industries out there, but Lululemon was still growing revenue at over 20% annually just a few years ago. A crowded market didn't prevent Lululemon from taking on industry leaders like Nike and Adidas to get to where it is today. The only thing that has changed over the past few years is the economic environment, which has weighed on sales across the industry. The economy has been through multiple headwinds over the past five years with the pandemic, rising inflation, and elevated interest rates, which have exasperated people's appetite for spending on non-essential items like new clothes. This is pressuring Nike more than Lululemon. Lululemon's revenue grew 7% year over year last quarter, while Nike posted a decline. Lululemon's sales have consistently outperformed the industry leader over the last 10 years. Wall Street doesn't give the company enough credit for this. Lululemon's brand strength is evident in its gross margin, which came in at 58.3% in fiscal Q1 2025, up from 57.7% in fiscal Q1 2024, and slightly higher than 57.5% in fiscal Q1 2024. In a stronger consumer spending environment, Lululemon's premium brand positioning is capable of delivering stronger growth. Lululemon's above-average margins and financial strength should allow it to weather sluggish sales trends, as well as any obstacles that tariffs on imported goods might present in the near term. Lululemon has $1.3 billion of cash and no debt on its balance sheet. The stock is trading at just 15 times this year's consensus earnings estimate, implying that analysts expect Lululemon to continue reporting a healthy profit. This is a bargain for a company that is still expanding into new categories, like footwear, and that has a lot of room to grow internationally over the long term. A combination of earnings growth and a higher price-to-earnings multiple could at least double the stock by 2030. Should you invest $1,000 in Krispy Kreme right now? Before you buy stock in Krispy Kreme, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Krispy Kreme wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,942!* Now, it's worth noting Stock Advisor's total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Lululemon Athletica Inc., Nike, and Walmart. The Motley Fool has a disclosure policy. 2 Bargain Stocks That Could Double Your Money was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

Yahoo

2 days ago

Yahoo

2 Bargain Stocks That Could Double Your Money

Key Points Krispy Kreme offers substantial upside if management can stabilize sales and reduce debt. Lululemon's premium brand positioning in the sports apparel market is significantly undervalued. 10 stocks we like better than Krispy Kreme › Even with the stock market hitting new highs, there are plenty of industries with beaten-down stocks that could benefit from an improving economy over the next five years. Krispy Kreme (NASDAQ: DNUT) stock is down 67% over the past year due to weak financial results, but the stock could soar if management's moves to improve profitability pay off. Lululemon Athletica (NASDAQ: LULU) stock is trading 57% off its recent highs over slowing growth and concerns about competition, but its recent financial results indicate that this brand is in a much stronger position than the market is giving it credit for. Let's dive deeper into why these stocks are underperforming, and why they could at least double from here. 1. Krispy Kreme Shares of Krispy Kreme haven't looked so crispy lately. The stock nosedived earlier this year after delivering disappointing revenue and earnings results. Making matters worse was the announcement that the company would suspend paying dividends to shareholders. But this just reflects the greater problem the company must solve to pay down its debt and shore up profitability. Krispy Kreme reported a loss of $33 million in the first quarter on $375 million of revenue, and revenue was down 15% over the year-ago quarter. It has restructured the leadership, and one of the initiatives is expanding the number of locations where doughnuts can be purchased. Global points of access grew 21% year over year in Q1 to 17,982, and management is aiming to reach 100,000 purchase locations in the future. While opening up more ways for customers to buy doughnuts can help strengthen sales, management is also focused on growing cash flow and paying down debt. The business is saddled with nearly $1 billion in debt and just $18.7 million in cash on its balance sheet. However, the business generated $42 million in cash from operations on a trailing 12-month basis, giving management resources to reduce debt. To strengthen sales, management is reducing reliance on discounting, being more diligent with marketing expenses, and focusing on higher-value options that drive higher margins. On the latter, it is looking to partner with grocery stores and mass retailers like Costco and Walmart's Sam's Club to sell large-volume doughnut packs. The high-volume sales at these locations could generate higher turnover and margins for the company to boost cash flow. Analysts expect Krispy Kreme's annual revenue to reach $2.7 billion by 2029. If the stock trades at a conservative price-to-sales (P/S) multiple of 0.50, that would translate to a 2.5x return from the current $3.13 share price. A sales multiple of 1 would translate to a $16 share price, or 5x return. Krispy Kreme is not a pretty-looking situation, but you have to be willing to buy stocks that no one wants to own to land those elusive multibaggers. There is execution risk here, as there is for any turnaround situation. But if current leadership can stabilize sales and reduce debt, this is a promising turnaround play for a high return in the next four years. 2. Lululemon Athletica Lululemon stock delivered market-beating returns over the last 15 years, as its brand emerged in the mainstream with the leaders in a historically growing industry. Some investors might see Lululemon as being past its prime, but its trailing 12-month revenue of $10.7 billion is still a very small share of the athletic apparel industry. It's got a lot of growth potential that isn't reflected in the stock price. A number of new competitors have emerged over the past decade. Apparel is one of the most competitive industries out there, but Lululemon was still growing revenue at over 20% annually just a few years ago. A crowded market didn't prevent Lululemon from taking on industry leaders like Nike and Adidas to get to where it is today. The only thing that has changed over the past few years is the economic environment, which has weighed on sales across the industry. The economy has been through multiple headwinds over the past five years with the pandemic, rising inflation, and elevated interest rates, which have exasperated people's appetite for spending on non-essential items like new clothes. This is pressuring Nike more than Lululemon. Lululemon's revenue grew 7% year over year last quarter, while Nike posted a decline. Lululemon's sales have consistently outperformed the industry leader over the last 10 years. Wall Street doesn't give the company enough credit for this. Lululemon's brand strength is evident in its gross margin, which came in at 58.3% in fiscal Q1 2025, up from 57.7% in fiscal Q1 2024, and slightly higher than 57.5% in fiscal Q1 2024. In a stronger consumer spending environment, Lululemon's premium brand positioning is capable of delivering stronger growth. Lululemon's above-average margins and financial strength should allow it to weather sluggish sales trends, as well as any obstacles that tariffs on imported goods might present in the near term. Lululemon has $1.3 billion of cash and no debt on its balance sheet. The stock is trading at just 15 times this year's consensus earnings estimate, implying that analysts expect Lululemon to continue reporting a healthy profit. This is a bargain for a company that is still expanding into new categories, like footwear, and that has a lot of room to grow internationally over the long term. A combination of earnings growth and a higher price-to-earnings multiple could at least double the stock by 2030. Should you invest $1,000 in Krispy Kreme right now? Before you buy stock in Krispy Kreme, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Krispy Kreme wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,774!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,942!* Now, it's worth noting Stock Advisor's total average return is 1,040% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Lululemon Athletica Inc., Nike, and Walmart. The Motley Fool has a disclosure policy. 2 Bargain Stocks That Could Double Your Money was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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Is Investing in "The DORKs" a Good Idea Right Now?

2 Bargain Stocks That Could Double Your Money

2 Bargain Stocks That Could Double Your Money

Maria Rivera named CEO of Starbird

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Is Investing in "The DORKs" a Good Idea Right Now?

2 Bargain Stocks That Could Double Your Money

2 Bargain Stocks That Could Double Your Money

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