We scoured the recent upgrades and downgrades in our Zen Ratings system; here are the highlights of what’s hot and what’s not:
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🥶 NOT: Mediterranean fast-casual chain Cava Group (CAVA) is up 5% in the past 3 months following its largest-ever menu launch; however, the longer-term trend isn’t so sunny. The stock is down over 40% in the past year, and its Zen Rating reveals scary fundamentals. CAVA was just downgraded from a Sell to Strong Sell (F) rating, putting it in the lowest tier of stocks we track. It only ranks #37 out of 41 in its Restaurant industry, which itself has an F industry grade. Its Component Grades are frightening; Ds for Sentiment and Value, and an F for Momentum. The rest of the grades are middling Cs — there’s nothing above-average about this stock. Sure, the menu launch and consumer buzz are real positives, but the valuation appears stretched and the underlying ratings signal caution. For growth investors willing to stomach volatility, CAVA could offer speculative upside. But for most investors, it’s one to avoid.
🔥 HOT: Looks like it was a happy holiday season for toymaker Hasbro (HAS) — the stock is up 16% in the past 3 months. What's driving the momentum? Magic: The Gathering monetization has worked well, with the iconic trading card game delivering solid revenue gains in Hasbro's gaming portfolio. The company's Zen Rating just upgraded from B (Buy) to A (Strong Buy), signaling it’s now in a class of stocks that have historically averaged 32.52% annual gains. It also has some impressive Component Grades, including exceptional A grades for Financials and Growth, signaling robust earnings potential and operational strength. Additionally, the stock ranks #2 in its Leisure industry, further cementing its sector leadership. But be cautious: potential tariff headwinds and fan backlash over MTG monetization could introduce uncertainty. Still, with strong fundamentals and fresh momentum, this looks like a jet-fueled moment for the toymaker.
🥶 NOT: Self-storage REIT CubeSmart (CUBE) is feeling the pain as rising bond yields pressure the sector by making income alternatives more attractive, pulling capital away from real estate. The stock is down 8% in the past 3 months, and has slipped below its 50-day, 100-day, and 200-day moving averages, a technical warning sign that momentum has stalled.
CubeSmart's Zen Rating was recently downgraded from Hold (C) to Sell (D), signaling investors should be cautious. Its Component Grades reveal more weakness: F grade for Growth and D grades for Momentum and Sentiment, signaling stagnant fundamentals and bearish investor mood. While CUBE does score a B for Safety and offers dividend income, the combination of negative momentum, downgrade, and sector headwinds makes this a tough hold. Better to wait for a more favorable entry point or park capital elsewhere.
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