Zacks.com featured expert Kevin Matras highlights: Cooper Industries, Ltd., Cabot Oil & Gas Corp., Deere & Company, Potlatch Corp. and RBC Bearings.
Chicago, IL February 24, 2009- Kevin Matras explains how to find the best stocks to short. Stocks in this weeks article include Cooper Industries, Ltd. (CBE - Snapshot Report), Cabot Oil & Gas Corp. (COG - Analyst Report), Deere & Company (DE - Analyst Report), Potlatch Corp. (PCH - Snapshot Report) and RBC Bearings, Inc. (ROLL - Snapshot Report). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109
Screen of the Week written by Kevin Matras of Zacks Investment Research:
With the market in a downtrend, one of the best ways to make money has been on the short side.
One of my favorite things lately has been to find companies with earnings that are projected to be lower than last year AND earnings for next year that are projected to be lower than this year.
Seems simple enough, but you'd be surprised at how many companies are projected down this year but up the next. (Of course, expecting to be up and actually being up are two totally different things.)
But finding those companies whose 'recoveries' are in the more distant future make these companies (in my opinion) last on the list to buy once we hit bottom. They are also some of the best candidates to short until then (and even beyond).
One of the reasons I like this concept is because most analysts seem to take a pretty optimistic view in the future.
Maybe it's human nature.
I secretly call this the Chicago Cubs effect. (I guess its no secret now.) What's the old adage after the Cubs blow it every year? "Wait 'til next year."
(I'm allowed to say this as I'm a Cubs fan. And Sox for that matter.)
But the future is always brighter, or so it seems.
But what if these analysts get even more sour on the companies prospects? Not a good sign.
And if you still believe the views are a bit optimistic, then there's likely even more pain in store than what's forecast.
So in this week's screen, we're screening for:
- This Year's Projected EPS < Last Year's Actual EPS
(F1 < F0) (Estimate if not reported yet)
- Next Year's Projected EPS < This Year's Projected EPS
(F2 < F1) (There's the Cubs effect "wait 'til next year" not.)
- Zacks Rank >= 4
(Which means Sells and Strong Sells)
- % Change in F1 Est. over 12 weeks < 0
(This year's earnings estimates being revised down.)
- % Change in F2 Est. over 12 weeks < 0
(Next year's earnings estimates are being revised down also.)
- Current Price >= 10
- Volume (Avg. 20 Days Shares) >= 100,000
CBE - Snapshot Report Cooper Industries, Ltd.
COG - Analyst Report Cabot Oil & Gas Corp.
DE - Analyst Report Deere & Company
PCH - Snapshot Report Potlatch Corp.
ROLL - Snapshot Report RBC Bearings, Inc.
Get the rest of the stocks on this list and start looking for these kinds of companies on your own. But remember, the market won't go down forever. So start planning your buying strategy now to be ready for when the market finally does turn around. You can do it. Sign up for a free trial to the Research Wizard today and start putting your plan together right now: http://at.zacks.com/?id=111
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
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