For Immediate Release
Chicago, IL – March 19, 2020 – Stocks in this week’s article are Kimbell Royalty Partners (KRP - Free Report) , Switch, Inc. (SWCH - Free Report) , Sina Corp. (SINA - Free Report) and The Trade Desk Inc. (TTD - Free Report) .
4 Toxic Stocks to Dump or Play Short to Reap Profits
Accuracy in distinguishing overpriced stocks from the fairly priced ones leads to profitable investing. In a complicated market place, the overpriced stocks and the correctly priced ones are intermixed in such a way that differentiating between the two is a tough task. Figuring out bloated toxic stocks on a consistent basis and discarding them at the right time is the key to successful investing.
Usually, toxic companies are characterized by a high debt burden and are vulnerable to external shocks. The hype associated with the irrationally high-priced toxic stocks is usually short-lived as their intrinsic value falls short of their current price. Elevated price levels of these stocks can be due to either an irrational exuberance associated with them or some serious fundamental lacunae. If you own such overhyped stocks for a long period of time, you are bound to see huge loss 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 picking stocks with huge growth potential, figuring out toxic stocks and abandoning them at the right time is the key to shield your portfolio from big losses. You can make profits by short selling them.
For the rest of this Screen of the Week article please visit Zacks.com at:https://www.zacks.com/stock/news/820680/4-toxic-stocks-to-dump-or-play-short-to-reap-profits
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.
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