OBLN - 4 Downgraded Stocks to AVOID

Let’s dive into four stocks that have been downgraded to the “D” rating, meaning investors should consider selling: Esports Entertainment Group (GMBL), Obalon Therapeutics (OBLN), Universal Stainless & Alloy Products (USAP), and Zosano Pharma (ZSAN).

Esports Entertainment Group (GMBL)

Now that we can see the light at the end of the metaphorical pandemic tunnel, it is time to reevaluate investments in the eSports, video game, and screen-based entertainment industries. One such stock is GMBL, a Malta-based company that provides a licensed online eSports gambling platform. GMBL’s primary focus is facilitating gambling on video game competitions though the company has the potential to expand its horizons as time progresses.

GMBL is a POWR Ratings dud although it is at the center of a rapidly growing industry. GMBL has an "F" grade in the Buy & Hold Grade component along with a "D" grade in the Peer Grade component and "C" grades in the Industry Rank and Trade Grade components. Of the 31 stocks in the Entertainment - Casinos/Gambling sector, GMBL is ranked 26th. GMBL had a 51.19% price return in '20 yet the stock had a -62.16% price return in '19 and a -20.43% price return in '18.

The bottom line is it will prove difficult for GMBL to expand its service to the masses around the world as gambling on eSports is not universally legal. Investors should avoid GMBL until there are fewer headwinds in the quest to legalize video game gambling across the globe.

Obalon Therapeutics (OBLN)

Check out OBLN's 5-year chart and you will be taken aback. OBLN traded around $150 five years ago and has steadily declined all the way down to a mere $5. This medical device maker develops and commercializes such devices to treat those battling obesity. Though the company's balloon system seemed to have potential, OBLN has not fulfilled investor expectations.

OBLN has an "F" grade in the Buy & Hold Grade component of the POWR Ratings. OBLN also has a "D" Peer Grade along with a "C" Trade Grade component. The stock had a 2020 price return of -21.05%, a 2019 price return of -90.82%, and a 2018 price return of -68.68%. OBLN’s failure to expand its product base combined with its history of disappointing earnings make the stock quite risky.

Universal Stainless & Alloy Products (USAP)

USAP makes and markets finished and semi-finished products made of steel. However, these are highly specialized products such as those made with alloyed steel and stainless steel, meaning they do not have extensive utility nor mass appeal.

USAP has an "F" grade in the Buy & Hold POWR Rating component along with "D" grades in the Peer Grade and Trade Grade components. USAP is ranked 34th of 39 publicly traded companies in the Steel sector. USAP had a 2020 price return of -49.80% along with a 2019 price return of -8.08%. In fact, the company even had a -24.32% price return in 2018.

Take a look at USAP’s news headlines and you won’t find much. The moral of this story is you can find better investments for your hard-earned money than USAP.

Zosano Pharma (ZSAN)

This biopharma company develops transdermal microneedle patch systems to transmit drugs by way of the skin to treat a wide range of conditions. ZSAN products are designed to treat osteoporosis, hypoglycemia, and migraine headaches.

The POWR Ratings reveal ZSAN has an "F" grade in the Buy & Hold Grade component along with "C" grades in the Peer Grade and Trade Grade components. ZSAN is ranked 360th out of 484 stocks in the Biotech space. ZSAN had a 2020 price return of -65.32%, a '19 price return of -28.30%, and an '18 price return of -79.62%.

Though ZSAN traded above $60 merely four years ago, the stock has swiftly declined in recent years, moving all the way down to its current status as a penny stock. Stay far away from ZSAN until some positive information about its products in development hits the newswire.