Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.
One such stock that you may want to consider dropping is Applied Micro Circuits Corporation (AMCC - Analyst Report), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in AMCC.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimate moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from 3 cents a share a month ago to its current level of loss of 28 cents.
Also, for the current quarter, Applied Micro Circuits Corporation has seen 1 downward estimate revision versus no revision in the opposite direction, widening the loss estimate to 10 cents a share from 2 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 19.4% in the past month.
So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.
If you are still interested in the Electronic-Semiconductor industry, you may instead consider some better-ranked stocks including AXT Inc. (AXTI - Snapshot Report), NVE Corp. (NVEC - Snapshot Report) and Pericom Semiconductor Corp. (PSEM - Snapshot Report). All these stocks hold a Zacks Rank #1 (Strong Buy) and may be better selections at this time.