Back to top

Image: Bigstock

Zacks.com featured highlights Howard Hughes, Vertex, TechTarget and Pegasystems

Read MoreHide Full Article

For Immediate Release

Chicago, IL – June 2, 2023 – Stocks in this week’s article are The Howard Hughes Corp. , Vertex, Inc. (VERX - Free Report) , TechTarget, Inc. (TTGT - Free Report) and Pegasystems Inc. (PEGA - Free Report) .

Discard These 4 Toxic Stocks to Enhance Portfolio Performance

Toxic stocks, as the name suggests, are not suitable for your portfolio. These appear lucrative at first, mostly because of their popularity, but turn out to be risky eventually. The risk of owning toxic stocks can be prevented if investors remain vigilant about the performance of every stock that they own in their portfolios.

Let’s first understand how to identify toxic stocks. The performance of a stock mainly depends on the performance of the underlying company, which, in turn, is subject to the company’s financial flexibility, its legal standing and management's decisions.

Most companies issue debt to raise money to grow their businesses. But the problem begins when those companies are unable to generate enough profits to pay off their liabilities. Stock prices of such insolvent companies get wiped out within a few days or even within a few hours.

By careful examination of a company’s financial statements, its actual performance can be gauged. The intrinsic value of a company under distress is usually lower than its stock price. Such a stock becomes overvalued and is prone to losing its value over time. This is the time when investors should pull out of such risky investments.

The stock price of a company also depends on management’s decision and legal challenges that it faces. If management is inexperienced or has a track record of making poor decisions, the company’s future and ultimately the performance of the stock are bound to go downhill. Investors can prevent themselves from such risks by keeping abreast of the latest news on the company.

In some instances, investors may fail to identify toxic stocks despite meticulously studying financial statements because of misleading information. In such cases, diversification can prove to be a savior. Accumulating stocks from different sectors with low correlation is a key to diversification. A well-diversified portfolio is least likely to suffer from the adverse outcome of a toxic stock present in the portfolio.

Detection and removal of toxic stocks is a pathway to a healthy portfolio. If investors can successfully identify a toxic stock in their portfolio, they can short-sell it and buy it again at a lower price to generate profits.

The Howard Hughes Corp., Vertex, Inc., TechTarget, Inc. and Pegasystems Inc. are a few toxic stocks that you should dump from your portfolio.

Here are four of the 21 toxic stocks that showed up on the screen:

Howard Hughes operates as a real estate company engaged in the development of master-planned communities and other strategic real estate development opportunities across the United States. The Zacks Consensus Estimate for HHC’s 2023 bottom line is pegged at a loss of $1.01 per share, implying a year-over-year deterioration of 127.67%.

The consensus mark has moved south from earnings of 6 cents per share over the past 30 days. Howard Huges beat earnings estimates in three out of the last four quarters and missed once, with the average surprise being 53.14%. The company carries a Zacks Rank #4 (Sell) and has a VGM Score of F.

Vertex provides tax technology solutions for corporations in retail, leasing, communication and manufacturing industries, principally in the United States and internationally. The Zacks Consensus Estimate for VERX’s 2023 bottom line is pegged at a profit of 35 cents per share. The consensus mark has moved south from earnings of 37 cents per share to earnings of 35 cents per share over the past 30 days. Vertex beat earnings estimates in three of the four trailing quarters and met once, with the average surprise being 35.83%. The company carries a Zacks Rank #4 and has a VGM Score of D.

TECHTARGET is a leading online Information Technology media company, providing IT companies with ROI-focused marketing programs to generate leads, shorten sales cycles, and grow revenues. The Zacks Consensus Estimate for TTGT’s 2023 bottom line is pegged at a profit of $1.52 per share, implying a year-over-year deterioration of 40.63%.

The Zacks Consensus Estimate for the firm’s 2023 earnings has moved south from $1.93 per share over the past 30 days. TECHTARGET beat earnings estimates in all four trailing quarters, with the average surprise being 11.17%. The company carries a Zacks Rank #4 and has a VGM Score of C.

Pegasystems is a leading provider of customer relationship management software that enables transaction-intensive organizations to manage a broad array of customer interactions. The Zacks Consensus Estimate for PEGA’s 2023 bottom line is pegged at a profit of $1.37 per share. The Zacks Consensus Estimate for the firm’s 2023 bottom line has moved south from earnings of $1.40 per share over the past 60 days.

Pegasystems beat earnings estimates in one out of the four trailing quarters and missed thrice, with the average surprise being negative 105.47%. The company carries a Zacks Rank #4 and has a VGM Score of C.

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/2102378/discard-these-4-toxic-stocks-to-enhance-portfolio-performance

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.

Get it free >>

Follow us on Twitter:  https://www.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/

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:


Pegasystems Inc. (PEGA) - free report >>

TechTarget, Inc. (TTGT) - free report >>

Vertex, Inc. (VERX) - free report >>

Published in