Back to top

Press Releases

Zacks Equity Research

Zacks.com featured highlights: Allegheny Technologies, salesforce.com, United States Steel, Vertex Pharmaceuticals and Continental Resources

ATI CRM X VRTX CLR

Trades from $3

For Immediate Release

Chicago, IL – November 22, 2016 - Stocks in this week’s article include Allegheny Technologies Inc. (NYSE:(ATI - Free Report) -Free Report), salesforce.com, inc. (NYSE:(CRM - Free Report) -Free Report),United States Steel Corp. (NYSE:(X - Free Report) -Free Report), Vertex Pharmaceuticals Incorporated (Nasdaq:(VRTX - Free Report) -Free Report) and Continental Resources, Inc. (NYSE:(CLR - Free Report) - Free Report).

Screen of the Week of Zacks Investment Research:

5 Toxic Stocks to Get Rid of or Play Short Right Now

The ability to differentiate overhyped stocks from the fairly priced ones makes the investing foolproof. But in the complex market place, correctly priced stocks and over-bubble stocks are mingled in such a way that making a distinction between them becomes very difficult. Nevertheless, precisely pinpointing bloated toxic stocks on a regular basis and abandoning them at the right time is one of the secrets to a winning investment strategy.

Toxic companies are usually vulnerable to external shocks and are characterized by high debt loads. The hype surrounding irrationally high-priced toxic stocks is usually short-lived as their current price exceeds the intrinsic value. These toxic stocks are bound to result in loss for investors over time.

Higher prices of toxic stocks can be ascribed to either an irrational exuberance associated with them or some serious fundamental drawbacks. If you own such bloated stocks for a long period of time, you are bound to see huge erosion 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 identifying stocks with growth potential, pinpointing toxic stocks and discarding them at the right time is the key to guard your portfolio from big losses or make profits by short selling them.

Screening Criteria

Here is a winning strategy that will help you identify overhyped toxic stocks:

Most recent Debt/Equity Ratio greater than the median industry average : High debt/equity ratio implies high leverage. High leverage indicates a huge level of repayment that the company has to make in connection with the debt amount.

P/E using 12-month forward EPS estimate greater than 50 : A very high forward P/E implies that a stock is highly overvalued.

% Change in F (1) and F (2) Estimate (12 Weeks) less than -5 : Negative EPS estimate revision for this and the next fiscal year during the past 12 weeks points to analysts’ pessimism.

Zacks Rank more than or equal to #3 (Hold) : We have not considered Buy-rated stocks that generally outperform the market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

Here are five of the 12 toxic stocks that showed up on the screen:

Pittsburgh, PA-based Allegheny Technologies Inc. (NYSE:(ATI - Free Report) - Free Report) is an industrial goods company which is engaged in the production and selling of specialty materials and components worldwide. Over the past one-month period, the current quarter estimate has deteriorated from a profit of 3 cents a share to a loss of 9 cents. The stock currently has a Zacks Rank #3.

salesforce.com, inc. (NYSE:(CRM - Free Report) - Free Report) is a San Francisco, CA-based computer software industry firm. Over the past one-month period, its current quarter earnings estimate has remained unchanged at 6 cents. Currently, the company carries a Zacks Rank #3.

Pittsburgh, PA-based United States Steel Corp. (NYSE:(X - Free Report) - Free Report) is engaged in the manufacture and selling of a variety of steel mill products, coke and taconite pellets. Over the past one-month period, its current quarter earnings estimate has drastically declined from 73 cents a share to 7 cents. Currently, the company carries a Zacks Rank #3.

Boston, MA-based, Vertex Pharmaceuticals Incorporated (Nasdaq:(VRTX - Free Report) - Free Report) is a bio-technology company. Over the past one-month period, the current quarter estimate has moved down from earnings of 6 cents a share to a no loss, no gain situation. The stock currently has a Zacks Rank #3.

Oklahoma City, OK-based Continental Resources, Inc. (NYSE:(CLR - Free Report) - Free Report) is engaged in the exploration, development and production of crude oil and natural gas properties in the north, south, and east regions of the U.S. Over the past one-month period, its current quarter estimate has remained unchanged at a loss of 10 cents. Currently, the company carries a Zacks Rank #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 .

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.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance .

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111

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. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.

Get the full Report on ATI - FREE

Get the full Report on CRM - FREE

Get the full Report on X - FREE

Get the full Report on VRTX - FREE

Get the full Report on CLR - FREE

Follow us on Twitter: https://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/performance

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.