For Immediate Release
Chicago, IL –August 08, 2017 - Stocks in this week’s article includePTC Inc.(NASDAQ:PTC – Free Report), Continental Resources, Inc. (NYSE:CLR – Free Report), Halcon Resources Corporation (NYSE:HK – Free Report), Apache Corporation (NYSE:APA – Free Report) and Zillow Group, Inc. (NASDAQ:ZG – Free Report).
5 Toxic Stocks to Avoid or Sell Short
Investing success hinges upon precise identification of overpriced stocks and fairly priced ones. However, the over-hyped toxic stocks and the correctly priced stocks are mingled in the marketplace in such a way that it becomes very tough to differentiate between them. Investors who can pinpoint the toxic stocks and discard them at the right time are likely to gain.
Generally, toxic stocks are vulnerable to external shocks and are loaded with high levels of debt. Also, price of the toxic stocks is irrationally high. The unjustifiably high price of the toxic stocks is only short-lived as the intrinsic value of these stocks is lower than the current bloated price.
The inflated price of the toxic stocks can be ascribed to either an irrational exuberance associated with them or some serious fundamental lacunae in the stock. If you own such stocks for a long period of time, you are likely to witness huge erosion in your wealth.
On the other hand, if you can figure out the toxic stocks correctly, you may gain by resorting to an investing strategy called short selling. This strategy allows you to sell a stock first and then buy it when the price falls.
While short selling excels in bear markets, it typically loses money in bull markets.
So, picking up toxic stocks and abandoning them at the right time is the key to protect your portfolio from big losses. Profits can be made by short selling them.
Screening Criteria
Here is a winning strategy that will help you to identify overpriced toxic stocks:
Most recent Debt/Equity Ratio greater than the median industry average: High debt/equity ratio implies high leverage. High leverage indicates a huge level of repayment that the company has to make in connection with the debt amount.
P/E using 12-month forward EPS estimate greater than 50: A very high forward P/E implies that a stock is highly overvalued.
% Change in F (1) and F (2) Estimate (12 Weeks) less than -5: Negative EPS estimate revision for this and the next fiscal year during the past 12 weeks points to analysts’ pessimism.
Zacks Rank more than or equal to #3 (Hold): We have not considered Buy-rated stocks that generally outperform the market.
Here are five of the 18 toxic stocks that showed up on the screen:
PTC Inc. (NASDAQ:PTC – Free Report) is a Needham, MA-based software company engaged in developing, marketing and supporting software solutions. Over the past one-month period, current quarter estimates declined 11.1% to 24 cents. The stock currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Oklahoma City, OK-based Continental Resources, Inc. (NYSE:CLR – Free Report) is a crude-oil concentrated, independent oil and natural gas exploration and production company. Over the past one-month period, current quarter estimates declined from 5 cents to a break-even. The stock currently has a Zacks Rank #3.
Halcon Resources Corporation (NYSE:HK – Free Report) is a Houston, TX-based energy company engaged in the acquisition, exploration and development of onshore oil and natural gas properties in the U.S. Over the past one-month period, current quarter estimates declined from 8 cents to a penny. The stock currently has a Zacks Rank #4 (Sell).
Houston, TX-based Apache Corporation (NYSE:APA – Free Report) is engaged in exploration, development and production of natural gas, crude oil and natural gas liquids. Over the past one-month period, current quarter estimates declined from 31 cents to 10 cents per share. The stock currently has a Zacks Rank #5 (Strong Sell).
Seattle, WA-based Zillow Group, Inc. (NASDAQ:ZG – Free Report) is engaged in providing real estate and home-related brands on the web and mobile. Over the past one-month period, current quarter estimates have widened from a loss of 14 cents to a loss of 15 cents per share. The stock currently has a Zacks Rank #3.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Click here for your free subscription to Profit from the Pros.
Get the full Report on PTC - FREE
Get the full Report on CLR - FREE
Get the full Report on HK - FREE
Get the full Report on APA - FREE
Get the full Report on ZG - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/performance
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights: PTC, Continental Resources Halcon Resources, Apache and Zillow Group
For Immediate Release
Chicago, IL –August 08, 2017 - Stocks in this week’s article includePTC Inc.(NASDAQ:PTC – Free Report), Continental Resources, Inc. (NYSE:CLR – Free Report), Halcon Resources Corporation (NYSE:HK – Free Report), Apache Corporation (NYSE:APA – Free Report) and Zillow Group, Inc. (NASDAQ:ZG – Free Report).
5 Toxic Stocks to Avoid or Sell Short
Investing success hinges upon precise identification of overpriced stocks and fairly priced ones. However, the over-hyped toxic stocks and the correctly priced stocks are mingled in the marketplace in such a way that it becomes very tough to differentiate between them. Investors who can pinpoint the toxic stocks and discard them at the right time are likely to gain.
Generally, toxic stocks are vulnerable to external shocks and are loaded with high levels of debt. Also, price of the toxic stocks is irrationally high. The unjustifiably high price of the toxic stocks is only short-lived as the intrinsic value of these stocks is lower than the current bloated price.
The inflated price of the toxic stocks can be ascribed to either an irrational exuberance associated with them or some serious fundamental lacunae in the stock. If you own such stocks for a long period of time, you are likely to witness huge erosion in your wealth.
On the other hand, if you can figure out the toxic stocks correctly, you may gain by resorting to an investing strategy called short selling. This strategy allows you to sell a stock first and then buy it when the price falls.
While short selling excels in bear markets, it typically loses money in bull markets.
So, picking up toxic stocks and abandoning them at the right time is the key to protect your portfolio from big losses. Profits can be made by short selling them.
Screening Criteria
Here is a winning strategy that will help you to identify overpriced toxic stocks:
Most recent Debt/Equity Ratio greater than the median industry average: High debt/equity ratio implies high leverage. High leverage indicates a huge level of repayment that the company has to make in connection with the debt amount.
P/E using 12-month forward EPS estimate greater than 50: A very high forward P/E implies that a stock is highly overvalued.
% Change in F (1) and F (2) Estimate (12 Weeks) less than -5: Negative EPS estimate revision for this and the next fiscal year during the past 12 weeks points to analysts’ pessimism.
Zacks Rank more than or equal to #3 (Hold): We have not considered Buy-rated stocks that generally outperform the market.
Here are five of the 18 toxic stocks that showed up on the screen:
PTC Inc. (NASDAQ:PTC – Free Report) is a Needham, MA-based software company engaged in developing, marketing and supporting software solutions. Over the past one-month period, current quarter estimates declined 11.1% to 24 cents. The stock currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Oklahoma City, OK-based Continental Resources, Inc. (NYSE:CLR – Free Report) is a crude-oil concentrated, independent oil and natural gas exploration and production company. Over the past one-month period, current quarter estimates declined from 5 cents to a break-even. The stock currently has a Zacks Rank #3.
Halcon Resources Corporation (NYSE:HK – Free Report) is a Houston, TX-based energy company engaged in the acquisition, exploration and development of onshore oil and natural gas properties in the U.S. Over the past one-month period, current quarter estimates declined from 8 cents to a penny. The stock currently has a Zacks Rank #4 (Sell).
Houston, TX-based Apache Corporation (NYSE:APA – Free Report) is engaged in exploration, development and production of natural gas, crude oil and natural gas liquids. Over the past one-month period, current quarter estimates declined from 31 cents to 10 cents per share. The stock currently has a Zacks Rank #5 (Strong Sell).
Seattle, WA-based Zillow Group, Inc. (NASDAQ:ZG – Free Report) is engaged in providing real estate and home-related brands on the web and mobile. Over the past one-month period, current quarter estimates have widened from a loss of 14 cents to a loss of 15 cents per share. The stock currently has a Zacks Rank #3.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Click here for your free subscription to Profit from the Pros.
Get the full Report on PTC - FREE
Get the full Report on CLR - FREE
Get the full Report on HK - FREE
Get the full Report on APA - FREE
Get the full Report on ZG - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/performance
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.