2009-10-30 22:07:03 -
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): The Great Atlantic & Pacific Tea Co. (NYSE: GAP : 
) and Encore Wire Corp. (Nasdaq: WIRE : ).
Further,
Zacks announced #4 Rankings (Sell) on two other widely held stocks: Pool Corp. (Nasdaq: POOL :
) and The Medicines Co. (Nasdaq: MDCO :
).
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 of Stocks to Sell Now by 80% annually (+2% vs. +10%). 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 GAP and WIRE 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.
The Great Atlantic & Pacific Tea Co.’s (NYSE: GAP :
) second-quarter loss of $2.98 per share, announced on Oct 19, was wider than the Zacks Consensus Estimate of a loss of 74 cents. This was worse than last year’s loss of $1.50 per share. Revenues declined to $2.07 billion from $2.18 billion while same-store sales fell 3.8%. The full-year average forecast now stands at a loss of $3.95 per share, compared to a month-ago forecast of a loss of $2.24.
Encore Wire Corp. (Nasdaq: WIRE :
) recorded a 97% drop in third-quarter profit on a year-over-year basis as sales declined to $168.7 million from $296.3 million. On Oct 21, Encore reported earnings per share of 1 cent, which fell short of analysts’ expectations of 12 cents. The Zacks Consensus Estimate for this year declined 19 cents to 30 cents per share over the past 7 days, reflecting cuts by all of the 4 covering analysts.
Here is a synopsis of why POOL and MDCO 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;
Pool Corp. (Nasdaq: POOL :
) expects full-year earnings per share of 95 cents to $1, down from its earlier projection of $1 to $1.05. On Oct 27, the company earned 35 cents per share in the third quarter, missing the average forecast by 16%. Five analysts out of 7 revised downward over the past week, sending the Zacks Consensus Estimate for 2009 lower by 6 cents to 97 per share.
The Medicines Co. (Nasdaq: MDCO :
) announced a third-quarter loss of 6 cents per share yesterday that widened by a penny, compared to analysts’ projections. The Zacks Consensus Estimate for the full year is 6 cents per share, a decline from 27 cents over the past 30 days as 5 out of 6 analysts pulled back on expectations. Next year’s estimate slipped to 67 cents per share from 76 cents in the same period.
Truly taking advantage of the Zacks Rank requires the understanding of how it works. The free special report; “Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions” is available to provide this insightful background. Download a free copy now to prosper in the years to come at
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 +27%.
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 significantly underperformed the S&P 500 (-0.9% versus +9%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
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