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): 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: http://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.
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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 +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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