3 Unattractive Stocks to Avoid as the S&P 500 Soars

The S&P 500 (SPX) has risen 6% already this year. This is a tricky time to be an investor, as avoiding unattractive stocks is easier said than done when stocks representing every business sector seem to be heading higher with a renewed investor interest in risk assets. In the investment world, a brief recovery of stock prices amid a negative trend is known as a “dead cat bounce,” and these market events often end up hurting many investors’ portfolios.

Given that it is difficult – if not impossible – to predict inflection points in the directional movement of stock prices, investors should try to avoid seemingly unattractive, overpriced stocks as these stocks end up falling the most. TAL Education Group (NYSE:TAL), Cintas Corporation (NASDAQ:CTAS), and Church & Dwight Co. (NYSE:CHD) are three unattractive stocks that are best avoided, in my opinion, amid uncertain macroeconomic conditions. I am bearish on the prospects for these three stocks.

TAL Education (NYSE:TAL) Group Faces Regulatory Headwinds

TAL Education stock has been on a tear in the last 12 months, rising by almost 150%, aided by better-than-expected earnings and expectations for easing regulatory tensions. In 2021, Chinese regulators banned for-profit after-school tutoring for private firms, sending TAL stock to record lows as the company’s revenue comprised mainly of fees collected by providing after-school tutoring services to K-9 students.

A rally in TAL stock was then triggered in 2022 amid speculation that China would reverse its decision along with a reversal of its crackdown on tech giants.

Since 2021, the company has made several strategic moves to spin off the K-9 after-school tutoring business while focusing on learning content development, technology development, and non-academic tutoring. These changes helped the company beat analyst estimates for revenue in the most recent quarter, but the reported revenue of $232.7 million was a staggering 77% decline on a year-over-year basis.

Regulators, so far, have not shown any signs of loosening their grip on the private tutoring industry despite Guo Shuqing, Communist Party Chief of the People’s Bank of China, reassuring investors earlier this month that the government will now shift its focus to achieving economic growth by supporting the private sector, including the beaten-down tech sector.

Is TAL Stock a Buy, According to Analysts?

Back in November, UBS analyst Felix Liu upgraded TAL…