2008-10-15 02:37:01 -
- Zacks.com releases details on a group of stocks that are currently members of the exclusive Zacks #5 Rank List - Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell): Alcoa, Inc. (NYSE: AA) and Illinois Tool Works, Inc. (NYSE: ITW). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks:
Apple, Inc. (NASDAQ: AAPL) and ArvinMeritor, Inc. (NYSE: ARM). To see the full Zacks #5 Rank List - Stocks to Sell Now visit:
at.zacks.com/?id=92
Since inception in 1988, the S&P 500 has outperformed the Zacks #5 Rank List -- Stocks to Sell Now by 81% annually (+2% versus +11%). While the rest of Wall Street continued to tout stocks during the market declines of the last few years, Zacks told investors which stocks to sell or avoid.
Here is a synopsis of why AA and ITW have a Zacks Rank of #5 (Strong Sell) and should most likely be sold or avoided for the next one to three months. Note that a #5 Strong Sell rating is applied to 5% of all the stocks in the Zacks Rank universe:
Alcoa, Inc. (NYSE: AA) reported third-quarter profit that fell more than half and missed Wall Street estimates, sending shares to their lowest level in two decades. The largest U.S. aluminum producer's quarterly net income was $268 million, or 33 cents a share. The New York-based company also suspended a stock buyback program to conserve cash as the credit crisis aggravated. Analysts now see 2008 EPS of $2.08, down 25 cents from their forecast a week earlier.
Illinois Tool Works, Inc. (NYSE: ITW) cut its third-quarter and full-year guidance, hurt by a slowdown in North American industrial production. For 2008, it now sees profit of $3.22 to $3.34, down from $3.40 to $3.52 per share. The divestiture of its decorative surfaces unit has further affected the company's outlook. As raw material costs are steadily rising, Illinois Tool Works is trying to recover the expenses by passing them over to consumers. But since demand in the end markets has withered, margins are under pressure.
Here is a synopsis of why AAPL and ARM have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next one to three months. Note that a #4 Sell rating is applied to 15% of all the stocks ranked by Zacks;
Apple, Inc. (NASDAQ: AAPL) slumped to a new year-low mark recently, after analysts raised concern that weak consumer spending might finally be catching up to the best-performing technology share last year. Apple is already seeing a cut in orders for its Macs and iPhones from its manufacturing partners. The credit crunch has forced consumers to look at PCs that cost less, but Apple focuses on high-end computers and might not be able to keep pace with the rest of the market. The consensus estimate for Apple's 2008 earnings is pegged at $5.20 per share.
ArvinMeritor, Inc. (NYSE: ARM) is planning to spin off its Light Vehicle Systems business to reduce costs. The downturn in the automotive industry is likely to continue, with production cuts and rising steel and fuel prices hurting margins. The growing uncertainty in North American and European markets makes it difficult to see a rebound in the sector in the near term.
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at.zacks.com/?id=93.
About the Zacks Rank
Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +30%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 81% annually (+2% versus +11%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
Visit
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