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Don't Let These Soaring S&P 500 Stocks Fool You Today

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After the terrible nightmare in the first few weeks of 2016, the U.S. stock market made a heroic comeback. This is especially true as the S&P 500 logged in the best monthly performance since the bull run began in March 2009, climbing 6.8%, as per the data compiled by S&P Dow Jones Indices.    

The record performance were driven by a slew of upbeat economic data, a rebound in oil price, dovish Fed comments and a firming dollar that injected fresh optimism into the entire economy and brought back the appeal for riskier assets. This led to a bullish trend in stocks amid bouts of volatility.

Extra easing policies in Europe and Japan, stabilization in the Chinese economy and other positive developments across the globe added to the further strength. Notably, the S&P 500 is up nearly 13% from the recent low hit in February 11 but gained only 0.8% in the year-to-date timeframe.  

While many stocks have driven the S&P 500’s incredible performance last month, the surging stocks do not always reflect the true picture of the company’s growth potential. These might actually be fooling investors and are the odd ones that need to be weeded out from one’s portfolio.

How to Find Misleading Stocks?

Finding misleading stocks might be a daunting task but our Zacks Stock Screener makes this process simpler. First, we selected the stocks in the S&P 500 that surged in double digits in March and then screened for several metrics to find out the phony highfliers:

1.    Unfavorable Zacks Rank #4 (Sell) or 5 (Strong Sell)
2.    Bottom Zacks Industry Rank
3.    Current year negative EPS growth

Below are the five stocks that are misleading investors as these may not be fundamentally sound companies.

Starwood Hotels & Resorts Worldwide Inc. – Up 21.4%

Based in Stamford, Connecticut, Starwood Hotels is one of the world's leading hotel and leisure companies. It is the owner, operator and franchisor of hotels, resorts and residences under the renowned brands: St. Regis, The Luxury Collection, W, Westin, Le Méridien, Sheraton, Tribute Portfolio, Four Points by Sheraton, Aloft, Element, along with an expanded partnership with Design Hotels.

Zacks Rank: #4
Zacks Industry Rank: Bottom 43%
Fiscal 2016 EPS Growth Rate: -10.13%

The AES Corporation (AES - Free Report) – Up 20.4%

Based in Arlington, Virginia, The AES Corporation is a diversified power generation and utility company that owns and operates power plants to generate and sell power to customers, such as utilities, industrial users and other intermediaries.

Zacks Rank: #4
Zacks Industry Rank: Bottom 45%
Fiscal 2016 EPS Growth Rate: -17.5%

News Corporation – Up 17.1%

Based in New York, NY, News Corp. is a media and information services company focusing on creating and distributing content to consumers and businesses worldwide.

Zacks Rank: #4
Zacks Industry Rank: Bottom 40%
Fiscal 2016 EPS Growth Rate: -12.8%

Fluor Corporation (FLR - Free Report) – Up 16.6%

Based in Irving, Texas, Fluor is one of the world’s largest publicly traded engineering, procurement, construction (EPC), maintenance and project management companies.

Zacks Rank: #4
Zacks Industry Rank: Bottom 17%
Fiscal 2016 EPS Growth Rate: -5.6%

Tenet Healthcare Corp. (THC - Free Report) – Up 16.6%

Based in Dallas, Texas, Tenet Healthcare operates acute care hospitals and related healthcare facilities.

Zacks Rank: #5
Zacks Industry Rank: Bottom 22%
Fiscal 2016 EPS Growth Rate: -11.7%

Molson Coors Brewing Company (TAP - Free Report) – Up 13.3%

Based in Denver, Colorado, Molson Coors is the world's fifth-largest global brewer with a broad portfolio of over 40 brands, including Molson Canadian, Coors Light and Carling.

Zacks Rank: #5
Zacks Industry Rank: Bottom 9%
Fiscal 2016 EPS Growth Rate: -15.2%

Eastman Chemical Co. (EMN - Free Report) – Up 13.3%

Based in Kingsport, Tennessee, Eastman Chemical is a global chemical company with a broad portfolio of chemical, plastic, and fiber products.

Zacks Rank: #4
Zacks Industry Rank: Bottom 17%
Fiscal 2016 EPS Growth Rate: -3.8%

Praxair Inc. – Up 13.2%

Based in Danbury, Connecticut, Praxair is one of the largest industrial gases companies in North and South America.

Zacks Rank: #4
Zacks Industry Rank: Bottom 17%
Fiscal 2016 EPS Growth Rate: -4.8%

Viacom Inc. (VIAB - Free Report) – Up 13.2%

Based in New York, NY, Viacom is a leading global entertainment content company that creates television programs, motion pictures, short-form content, applications, games, consumer products, social media, and other entertainment content.

Zacks Rank: #4
Zacks Industry Rank: Bottom 22%
Fiscal 2016 EPS Growth Rate: -3.5%

Comerica Inc. (CMA - Free Report) – Up 12.7%

Based in Dallas, Texas, Comerica is a financial services company that aligned into three major business segments: the Business Bank, the Retail Bank and Wealth Management.

Zacks Rank: #4
Zacks Industry Rank: Bottom 9%
Fiscal 2016 EPS Growth Rate: -4.9%

Bottom Line

While the above-mentioned stocks led the S&P 500 higher last month, these are fooling investors and should better be ignored.

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