CHICAGO, Oct. 14, 2011 /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): Sears Holdings Corporation (Nasdaq: SHLD) and Cooper Tire & Rubber Company (NYSE: CTB). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: The Scotts Miracle-Gro Company (NYSE: SMG) and Cephalon, Inc. (Nasdaq: CEPH).
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 SHLD and CTB 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:
Sears Holdings Corporation (Nasdaq: SHLD) announced second-quarter profit of 38 cents per share on August 18 that missed analysts' expectations by 5%. The Zacks Consensus Estimate for the current year slid to $1.54 per share from $1.55 per share in the last 60 days as next year's estimate dipped 6 cents per share to $1.73 per share in that time span.
Cooper Tire & Rubber Company (NYSE: CTB) posted a second-quarter profit of 18 cents per share on August 4, which came in 28 cents wider than the average forecast. The Zacks Consensus Estimate for the full year fell to $1.17 per share from $1.59 per share over the past two months. For 2012, analysts expect a profit of $1.73 per share, compared to last two month's projection for a profit of $2.03 per share.
Here is a synopsis of why SMG and CEPH 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;
The Scotts Miracle-Gro Company (NYSE: SMG) third-quarter profit of $1.91 per share, posted on August 8, lagged analysts' projections by 12.79%. Estimate for current year slid 20 cents per share to $2.78 per share over a month as next year's estimate dipped 12 cents per share to $3.24 per share in that time span.
Cephalon, Inc. (Nasdaq: CEPH) reported a second-quarter profit of $1.62 per share on August 2 that fell 22.12% short of the Zacks Consensus Estimate. The full-year average forecast is currently $8.06 per share, compared with last month's projection of $8.11 per share. Next year's forecast dropped to $5.23 per share from $5.27 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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