CHICAGO, Jan. 8, 2013 /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): Baker Hughes Incorporated (NYSE : BHI) and Honda Motor Co Ltd (NYSE : HMC). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: Philip Morris International Inc. (NYSE : PM) and Tim Hortons Inc. (NYSE : THI).
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 BHI and HMC 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:
Baker Hughes Incorporated (NYSE : BHI) announced third -quarter profit of 73 cents per share on November 2 which came behind the Zacks Consensus Estimate by 11 cents. The diluted earnings per share also fell by 38.14% on a year-over-year basis. The Zacks Consensus Estimate for the current year slipped 11 cents per share to $3.23 in the last 30 days. Next year's estimate also dipped 43 cents per share to $3.24 per share in that time span.
Honda Motor Co Ltd (NYSE : HMC) posted a second -quarter profit of 59 cents per share on November 5, which came in 33 cent wider than the average forecast. The Zacks Consensus Estimate for 2012 fell to a profit of $3.06 per share from $3.21 over the past two months with none out of 2 covering analysts slashed forecasts. Next year's forecasts slipped 19 cents to $3.72 per share in the same time span.
Here is a synopsis of why PM and THI 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;
Philip Morris International Inc. (NYSE : PM) third -quarter profit of $1.38 per share, posted on October 18, lagged analysts projections by nearly 0.72%. For 2012, the Zacks Consensus Estimate moved down 1 cent in the last 60 days as 1 out of the 12 covering analysts cut back on forecasts. The forecast for next year slid 1 cent to $5.79 per share in the same time span.
Tim Hortons Inc. (NYSE : THI) reported a third-quarter profit of $2.70 per share on November 8, that fell 1.37% short of the Zacks Consensus Estimate. The full-year average forecast is currently pegged at $2.70 per share, compared with the last 60 days projection of $2.71. Next year's forecast dropped 5 cents 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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