Wolfe Research warned investors to avoid these low-quality stocks that could blow up. Using fourth-quarter corporate results, Wolfe Research identified potentially underperforming stocks using its earnings quality score, which considers several variables including sentiment, valuation metrics and various financial ratios. "With the Fed tightening, economic growth slowing, and recession risks rising, we expect a larger number of stock blow-ups over the coming quarters.
Shares of Match Group, whose portfolio of brands includes Tinder, have fallen 7.2% in 2023. The company has an earnings quality score of just 11. The research firm noted that Match Group is one of the companies with consistent earnings adjustments that increase GAAP, or generally accepted accounting principles, earnings by at least 20% for over nine out of the last 12 consecutive quarters.