CHICAGO - (Business Wire) 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):
Coventry Health Care, Inc. (NYSE: CVH) and
AU Optronics Corp (NYSE: AUO). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks:
Saks, Inc. (NYSE: SKS) and
Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP). To see the full Zacks #5 Rank List - Stocks to Sell Now visit:
http://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 129% annually (+5.3% vs. +12.1%). 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 CVH and AUO 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:
Coventry Health Care, Inc. (NYSE: CVH) sharply lowered its operating earnings outlook for the second quarter and fiscal 2008, citing unexpectedly high costs. Management now expects FY08 EPS in the range of $3.65 to $3.75 from prior $4.39 - $4.50. Shares of CVH are down almost 50% YTD. The combination of renewed cost trend concerns and lack of management visibility over last 3 months means this stock has challenging issues ahead of it.
AU Optronics Corp (NYSE: AUO) has had its earnings estimates lowered substantially by analysts in last 30 days. Soft demand trends appear to be applying pricing pressure. Earlier in the week, the company reported weaker sales for June 08, showing a decline of 17 % sequentially and down 6 % from a year ago period. Rising inventory levels are expected to pressure the profitability of the company.
Here is a synopsis of why SKS and SLXP 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;
Saks Inc. (NYSE: SKS) is the only pure play, publicly-traded luxury retailer. The stock is down over 50% in the last twelve months, and is trading close to a 5- year low. This sell-off comes on the heels of a severely weakened consumer environment, as the American economy continues to struggle. Comps for June were marginally better than May, driven likely by tax refunds. Concerns about the macro environment and the impact on consumer spending through the remainder of this year into next year will continue to pressure this stock for the foreseeable future.
Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP) has fallen upon hard times, largely because of the genericization of its key product Colazal. This is bad news news for Salix, as Colazal has been a major component of its profitability. It will be challenging to convert users to the new formulation now that generics are available. The possibility of a patent challenge for another key product, Xifaxan, will remain an overhang on the shares in the coming quarters. Salix expects to approach profitability in 2009 and achieve the 2007 level of revenue and EPS in 2010.
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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 +32.2%. 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 129% annually (+5.3% vs. +12.1%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
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