CHICAGO, Aug. 8, 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): Strayer Education Inc (NASDAQ:STRA) and Starbucks Corporation (NASDAQ:SBUX).Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: Energizer Holdings, Inc. (NYSE:ENR) and WMS Industries Inc. (NYSE:WMS).
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 STRA and SBUX 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:
Strayer Education Inc (NASDAQ:STRA) announced second -quarter profit of $1.85 per share on July 26 which came behind the Zacks Consensus Estimate by 1 cent. The diluted earnings per share also fell by 26.88% on a year-over-year basis. The Zacks Consensus Estimate for the current year slipped 20 cents per share to $5.86 in the last 30 days. Next year's estimate also dipped $1.59 per share to $5.81 per share in the same time span.
Starbucks Corporation (NASDAQ:SBUX) posted a third -quarter profit of 43 cents per share on July 26, which came in 2 cents wider than the average forecast. The Zacks Consensus Estimate for 2012 fell to $1.78 per share from $1.83 over the past month with 25 out of 27 covering analysts slashed forecasts. Next year's forecasts slipped 17 cents to $2.13 per share in the same time span.
Here is a synopsis of why ENR and WMS 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;
Energizer Holdings, Inc. (NYSE:ENR) third-quarter profit of $1.18 per share, posted on August 1, lagged analysts projections by nearly 10.61%. For 2012, the Zacks Consensus Estimate moved down 11 cents in the last 30 days as 9 out of the 11 covering analysts cut back on forecasts. The forecast for next year slid 29 cents to $6.36 per share in the same time span.
WMS Industries Inc. (NYSE:WMS) reported a fourth-quarter profit of 41 cents per share on August 6, that fell 8.89% short of the Zacks Consensus Estimate. The full-year average forecast is currently pegged at $1.54 per share, compared with the last 30 days projection of $1.59. Next year's forecast dropped 9 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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