CHICAGO, April 27, 2012 /PRNewswire/ -- Zacks.com releases details on a group of stocks that are currently members of the exclusive Zacks #5 Rank List – Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell): Arcos Dorados Holding Inc (NYSE: ARCO) and Quad/Graphics, Inc. (NYSE: QUAD). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: Warnaco Group Inc (NYSE: WRC) and Novartis AG (NYSE: NVS).
Since inception in 1988, the S&P 500 has outperformed the Zacks #5 Rank List of Stocks to Sell Now by 80% annually (+2% vs. +10%). While the rest of Wall Street continued to tout stocks during the market declines of the last few years, Zacks told investors which stocks to sell or avoid.
Here is a synopsis of why ARCO and QUAD have a Zacks Rank of #5 (Strong Sell) and should most likely be sold or avoided for the next one to three months. Note that a #5 Strong Sell rating is applied to 5% of all the stocks in the Zacks Rank universe:
Arcos Dorados Holding Inc (NYSE: ARCO) announced fourth-quarter profit of 22 cents per share on March 5 that missed analysts' expectations by 4.35%. The Zacks Consensus Estimate for the current year slid to 81 cents per share from 86 cents per share in the last 60 days as next year's estimate dipped 11 cents per share to $1 per share in that time span.
Quad/Graphics, Inc. (NYSE: QUAD) posted a fourth-quarter profit of 63 cents per share on February 29, which came in 37 cents wider than the average forecast. The Zacks Consensus Estimate for the full year fell to $1.80 per share from $2.18 per share over the past two months. For 2013, analysts expect a profit of $1.82 per share, compared to last two month's projection for a profit of $2.84 per share.
Here is a synopsis of why WRC and NVS have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next one to three months. Note that a #4 Sell rating is applied to 15% of all the stocks ranked by Zacks;
Warnaco Group Inc's (NYSE: WRC) fourth-quarter profit of 97 cents per share, posted on February 29, lagged analysts' projections by 1.02%. Estimate for current year slid 7 cents per share to $4.38 per share over two month's as next year's estimate dipped 13 cents per share to $4.94 per share in that time span.
Novartis AG (NYSE: NVS) reported a first-quarter profit of 95 cents per share on April 24 that fell 28.03% short of the Zacks Consensus Estimate. The full-year average forecast is currently $5.35 per share, compared with last month's projection of $5.49 per share. Next year's forecast dropped to $5.53 per share from $5.65 per share in the same period.
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About the Zacks Rank
Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of +28%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have significantly underperformed the S&P 500 (2.8% versus +9.7%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
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