CHICAGO, July 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): BRF Brasil Foods SA (NYSE: BRFS) and PriceSmart, Inc (NASDAQ: PSMT).Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: Warnaco Group Inc (NYSE: WRC) and Liberty Global Inc. (NASDAQ: LBTYA).
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 BRFS and PSMT 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:
BRF Brasil Foods SA (NYSE: BRFS) announced first -quarter profit of 10 cents per share on April 27 which came behind the Zacks Consensus Estimate by 17 cents. The diluted earnings per share also fell by 61.54% on a year-over-year basis. The Zacks Consensus Estimate for the current year slipped 4 cents per share to 88 cents in the last 30 days. Next year's estimate also dipped 7 cent per share to $1.21 per share in the same time span.
PriceSmart, Inc (NASDAQ: PSMT) posted a third -quarter profit of 52 cents per share on July 10, which came in 8 cents wider than the average forecast. The Zacks Consensus Estimate for 2012 fell to a profit of $2.25 per share from $2.32 over the past month with 3 out of 4 covering analysts slashed forecasts. Next year's forecasts slipped 13 cents to $2.76 per share in the same time span.
Here is a synopsis of why WRC and LBTYA 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 (NYSE: WRC) first-quarter profit of 90 cents per share, posted on May 10, lagged analysts projections by nearly 2.17%. For 2012, the Zacks Consensus Estimate moved down 6 cent in the last 30 days as 5 out of the 10 covering analysts cut back on forecasts. The forecast for next year slid 8 cents to $4.53 per share in the same time span.
Liberty Global Inc. (NASDAQ: LBTYA) reported a first-quarter profit of 17 cents per share on May 10, that fell 15% short of the Zacks Consensus Estimate. The full-year average forecast is currently pegged at 42 cents per share, compared with the last 60 days projection of $1.18. Next year's forecast dropped 50 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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