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Image: Bigstock featured highlights include: DexCom, Casella Waste Systems, Ceridian HCM Holding and Hexcel Corp

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For Immediate Release

Chicago, IL – March 9, 2021 – Stocks in this week’s article are DexCom, Inc. DXCM, Casella Waste Systems, Inc. (CWST - Free Report) , Ceridian HCM Holding Inc. CDAY and Hexcel Corporation HXL.

Keep Your Portfolio Protected from These Toxic Stocks

Accuracy in distinguishing overhyped stocks from the fairly priced ones leads to profitable investing. In a complicated marketplace, overpriced stocks and the correctly priced ones are intermixed in such a way that differentiating between the two is a tough task. Nonetheless, figuring out bloated toxic stocks on a consistent basis and discarding them at the right time is the key to successful investing.

Usually, toxic companies are characterized by a high debt burden and are vulnerable to external shocks. The hype associated with irrationally high-priced toxic stocks is usually short-lived as their intrinsic value falls short of their current price. These toxic stocks are sure to result in loss for investors over time.

Elevated price levels of these stocks can be either due to an irrational exuberance associated with them or some serious fundamental lacunae. If you own such overhyped stocks for a long period of time, you are bound to see a huge loss of wealth.

However, if you can correctly pick such toxic stocks, 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, just like picking stocks with huge growth potential, figuring out toxic stocks and abandoning them at the right time is the key to shield your portfolio from big losses or make profits by short selling them.

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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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