For Immediate Release
Chicago, IL – September 23, 2022 – Stocks in this week’s article are InnovAge Holding Corp. (
INNV Quick Quote INNV - Free Report) , Spirit AeroSystems Holdings, Inc. ( SPR Quick Quote SPR - Free Report) , Tandem Diabetes Care, Inc. ( TNDM Quick Quote TNDM - Free Report) and HCI Group ( HCI Quick Quote HCI - Free Report) . 4 Toxic Stocks that May Risk Your Peace and Prosperity
The Fed’s hawkish pivot in 2022 has been a thorn in stocks’ side. Yesterday, the Fed jacked up interest rates by another 75 bps to combat stubborn inflation. Amid exacerbated supply chain issues, sky-high inflation and aggressive rate hikes, recessionary worries are on the rise and Wall Street is likely to continue its choppy run. At this critical juncture, it’s as important to get rid of fundamentally weak toxic stocks as it is to invest in attractively valued companies possessing fundamental strength.
Toxic companies are usually characterized by huge debt loads and are vulnerable to external shocks. These stocks might illusively scale lofty heights in a given time period but the good show doesn’t last for these overblown toxic stocks, as their current price is not justified by their fundamental strength. Accurately identifying such bloated stocks and getting rid of them at the right time can protect your portfolio.
Overpricing of these toxic stocks can be attributed to either an irrational enthusiasm surrounding them or some serious fundamental drawbacks. If you own such bubble stocks for an inordinate period of time, you are bound to see massive erosion of wealth.
Nonetheless, if you can precisely spot such toxic stocks, you may gain by resorting to an investing strategy called short selling. This strategy allows one 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 identifying stocks with growth potential, pinpointing toxic stocks and offloading them at the right time is crucial to guard one’s portfolio from big losses or make profits by short selling them.
InnovAge Holding Corp., Spirit AeroSystems Holdings, Inc., Tandem Diabetes Care, Inc. and HCI Group are a few such toxic stocks.
Here are four of the 35 toxic stocks that showed up on the screen:
InnovAge is a healthcare delivery platform. This Denver-based company delivers its patient-centered care through the InnovAge Platform. InnovAge Platform is focused on frail, dual-eligible seniors as well as serves participants primarily through the Program of All-inclusive Care for the Elderly.
Over the trailing four quarters, InnovAge missed the consensus mark for earnings twice, topped once and met estimates on the other occasion, the negative average surprise being 120%. The Zacks Consensus Estimate for INNV’s fiscal 2023 bottom line has deteriorated from earnings of 6 cents a share to a loss of 1 cent over the past seven days. The consensus mark for earnings for the next fiscal year has declined 21 cents over the past seven days. InnovAge currently carries a Zacks Rank #5 (Strong Sell) and has a VGM Score of C.
Spirit AeroSystems: Based in Wichita, Spirit AeroSystems engineers, manufactures, and markets commercial aerostructures. The company’s core products include fuselages, pylons, nacelles and wing components.
The Zacks Consensus Estimate for SPR’s 2022 bottom line is pegged at a loss of $1.91 a share, widening from 20 cents a share 60 days ago. The consensus mark for the 2023 bottom line has moved south by 48% over the past 60 days. The company missed earnings in three of the trailing four quarters, while topping once, with the average negative surprise being 100.3%. SPR currently carries a Zacks Rank #5 and has a VGM Score of F.
Tandem Diabetes: Headquartered in California, TNDM designs, develops and markets products for people with insulin-dependent diabetes. The company's business is being hurt by heavy dependence on the sales of insulin pumps and escalating operating expenses.
Tandem Diabetes currently carries a Zacks Rank #5 and has a VGM Score of D. The Zacks Consensus Estimate for TNDM’s 2022 bottom line implies a year-over-year plunge of 796%. The consensus mark has deteriorated from earnings of 35 cents a share to a loss of 25 cents over the past 60 days. TNDM currently carries a Zacks Rank #5 and has a VGM Score of D.
HCI: Headquartered in Florida, HCI is a holding company that conducts its business activities through its subsidiaries. It is engaged in diverse business activities, including property and casualty insurance, information technology, real estate and reinsurance.
The Zacks Consensus Estimate for HCI’s 2022 bottom line is pegged at a loss of 45 cents, implying a year-over-year deterioration of 314%. The consensus mark of 2023 has moved south by 70 cents in the past 60 days. Over the trailing four quarters, HCI missed the consensus mark for earnings twice for as many beats, with the average negative surprise being 229%. The stock currently carries a Zacks Rank #5.
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/stock/news/1983541/4-toxic-stocks-that-may-risk-your-peace-and-prosperity 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 >>.
Follow us on Twitter:
Join us on Facebook:
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
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.
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.