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Don't Let These Toxic Stocks Disrupt Your Portfolio
Distinguishing between overpriced and fairly priced stocks is the key to successful investing. But the task is not easy, as the correctly priced and overvalued stocks are mingled in a very deceptive way in the marketplace. Investors who can pinpoint the overhyped toxic stocks and discard them at the right time are the ones poised to benefit.
Usually, toxic companies are vulnerable to external shocks. These companies are burdened with huge debts too. Also, the unjustifiably high price of the toxic stocks is short-lived as their current price exceeds their inherent value. Quite naturally, these stocks are bound to result in a loss for investors over time. Ligand Pharmaceuticals, Las Vegas Sands, CoStar Group and Blackbaud Inc. are a few such toxic stocks that you should dump to avoid portfolio bleeding.
Higher price of the toxic stocks can be attributed to either an irrational exuberance associated with them or some serious fundamental lacuna. If you own such stocks for long, you are likely to see a big loss in your wealth.
If you can, however, precisely spot the 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 figuring out stocks with growth potential, identifying toxic stocks and discarding them at the right time is the key to shield your portfolio from big losses or make profits by short selling them.
Here are our four of the 43 stocks that qualified the screening:
Ligand: San Diego-based Ligand is a biotechnology company focused on the development and licensing of biopharmaceutical assets. Ligand's dependence on the Captisol program and Captisol-based partnerships is concerning. If any of the company's partners fail to receive regulatory approval or terminate a deal, Ligand's prospects would be severely hampered.
Ligand currently carries a Zacks Rank #5 (Strong Sell) and has a VGM Score of C. The Zacks Consensus Estimate for LGND's 2022 earnings has moved south by 28 cents over the past 30 days to $2.99 a share, implying a 53.4% decline year over year.
CoStar: Based in the United States, CoStar provides information, analytics, and online marketplace services to the commercial real estate, hospitality, residential, and related professional industries. The company expects 2022 adjusted EBITDA in the band of $565-$605 million, implying a year-over-year decline of 10% at the midpoint.
CoStar currently carries a Zacks Rank #5 and has a VGM Score of D. The Zacks Consensus Estimate for CSGP's 2022 earnings has moved south by 8 cents over the past 30 days to $1.01 a share, implying an 11.4% decline year over year.
Blackbaud: Headquartered in Charleston, Blackbaud is a cloud software company working for social causes. The firm combines technology and expertise to help organizations achieve their missions. Stiff competition in the non-profit sector, macroeconomic weakness, a highly leveraged balance sheet and integration risks remain potential headwinds for BLKB.
Blackbaud currently carries a Zacks Rank #4 (Sell) and has a VGM Score of D. The Zacks Consensus Estimate for BLKB's 2022 earnings has moved south by 2 cents over the past 30 days to $2.72 a share, implying a 10.5% decline year over year.
Las Vegas Sands: Based in Las Vegas, LVS is an international developer of multi-use integrated resorts, primarily operating in the United States and Asia. The company's stretched balance sheet remains a major concern, especially amid the coronavirus crisis. As of Dec 31, 2021, Las Vegas Sands' total debt and unrestricted cash balance amounted to $14.8 billion and $1.8 billion, respectively.
LVS currently carries a Zacks Rank #4 and has a VGM Score of C. The Zacks Consensus Estimate for Las Vegas Sands' 2022 EPS has been revised 79% downward over the past 90 days. The stock missed earnings estimates in two of the trailing four quarters for as many misses, with the average negative surprise being 26.3%.
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.
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.
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
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Zacks.com featured highlights Ligand Pharmaceuticals, Las Vegas Sands, CoStar Group and Blackbaud
For Immediate Release
Chicago, IL – April 1, 2022 – Stocks in this week’s article are Ligand Pharmaceuticals (LGND - Free Report) , Las Vegas Sands (LVS - Free Report) , CoStar Group (CSGP - Free Report) and Blackbaud Inc. (BLKB - Free Report) .
Don't Let These Toxic Stocks Disrupt Your Portfolio
Distinguishing between overpriced and fairly priced stocks is the key to successful investing. But the task is not easy, as the correctly priced and overvalued stocks are mingled in a very deceptive way in the marketplace. Investors who can pinpoint the overhyped toxic stocks and discard them at the right time are the ones poised to benefit.
Usually, toxic companies are vulnerable to external shocks. These companies are burdened with huge debts too. Also, the unjustifiably high price of the toxic stocks is short-lived as their current price exceeds their inherent value. Quite naturally, these stocks are bound to result in a loss for investors over time. Ligand Pharmaceuticals, Las Vegas Sands, CoStar Group and Blackbaud Inc. are a few such toxic stocks that you should dump to avoid portfolio bleeding.
Higher price of the toxic stocks can be attributed to either an irrational exuberance associated with them or some serious fundamental lacuna. If you own such stocks for long, you are likely to see a big loss in your wealth.
If you can, however, precisely spot the 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 figuring out stocks with growth potential, identifying toxic stocks and discarding them at the right time is the key to shield your portfolio from big losses or make profits by short selling them.
Here are our four of the 43 stocks that qualified the screening:
Ligand: San Diego-based Ligand is a biotechnology company focused on the development and licensing of biopharmaceutical assets. Ligand's dependence on the Captisol program and Captisol-based partnerships is concerning. If any of the company's partners fail to receive regulatory approval or terminate a deal, Ligand's prospects would be severely hampered.
Ligand currently carries a Zacks Rank #5 (Strong Sell) and has a VGM Score of C. The Zacks Consensus Estimate for LGND's 2022 earnings has moved south by 28 cents over the past 30 days to $2.99 a share, implying a 53.4% decline year over year.
CoStar: Based in the United States, CoStar provides information, analytics, and online marketplace services to the commercial real estate, hospitality, residential, and related professional industries. The company expects 2022 adjusted EBITDA in the band of $565-$605 million, implying a year-over-year decline of 10% at the midpoint.
CoStar currently carries a Zacks Rank #5 and has a VGM Score of D. The Zacks Consensus Estimate for CSGP's 2022 earnings has moved south by 8 cents over the past 30 days to $1.01 a share, implying an 11.4% decline year over year.
Blackbaud: Headquartered in Charleston, Blackbaud is a cloud software company working for social causes. The firm combines technology and expertise to help organizations achieve their missions. Stiff competition in the non-profit sector, macroeconomic weakness, a highly leveraged balance sheet and integration risks remain potential headwinds for BLKB.
Blackbaud currently carries a Zacks Rank #4 (Sell) and has a VGM Score of D. The Zacks Consensus Estimate for BLKB's 2022 earnings has moved south by 2 cents over the past 30 days to $2.72 a share, implying a 10.5% decline year over year.
Las Vegas Sands: Based in Las Vegas, LVS is an international developer of multi-use integrated resorts, primarily operating in the United States and Asia. The company's stretched balance sheet remains a major concern, especially amid the coronavirus crisis. As of Dec 31, 2021, Las Vegas Sands' total debt and unrestricted cash balance amounted to $14.8 billion and $1.8 billion, respectively.
LVS currently carries a Zacks Rank #4 and has a VGM Score of C. The Zacks Consensus Estimate for Las Vegas Sands' 2022 EPS has been revised 79% downward over the past 90 days. The stock missed earnings estimates in two of the trailing four quarters for as many misses, with the average negative surprise being 26.3%.
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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/amp/stock/news/1890292/dont-let-these-toxic-stocks-disrupt-your-portfolio
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.
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.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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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/
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.