CHICAGO -- 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): Dean Foods Co. (NYSE: DF) and Liz Claiborne Inc. (NYSE: LIZ). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: Winnebago Inc. (NYSE: WGO) and abercrombie and fitch
(NYSE: ANF). To see the full Zacks #5 Rank List - Stocks to Sell Now visit:
(NYSE: ANF). To see the full Zacks #5 Rank List - Stocks to Sell Now visit:
Since inception in 1988, the S&P 500 has outperformed the Zacks #5 Rank List -- Stocks to Sell Now by 129% annually ( 5.3% vs. 12.1%). 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 DF and LIZ 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:
Dean Foods Co. (NYSE: DF) had a very challenging 2007 as the company was confronted with a litany of problems, one of the biggest being continued escalating dairy costs. On March 2 Dean announced that it would be selling an additional 18.7 million shares in a secondary offering, which would constitute a 13% dilution of its existing share base. Estimates for the company continue to fall, with five of eight covering analysts dropping their current-year forecast within the last 30 days, pushing the consensus estimate lower by 21 cents to its current projection of $1.26.
Liz Claiborne Inc. (NYSE: LIZ) shares have been getting pummeled since early October, dropping from $35 to their current location of just above $15, an overwhelming loss of over 57%. There is no question that the apparel and fragrance retailer has been feeling the pinch from the incredibly tepid consumer environment. The company reported a steep loss in its fourth quarter due to restructuring costs and large markdowns in its inventory. Estimates continue to fall, with the current-year consensus estimate shedding 50 cents in the last 60 days to move to its current projection of $1.58 per share.
Here is a synopsis of why WGO and ANF 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;
Winnebago Inc. (NYSE: WGO) is operating in what is considered to be one of the most highly elastic industries, and that has been a source of real pain for the company as domestic consumer discretionary spending has been severely dented by slumping housing prices and serious liquidity issues. The company's stock price has been in a steady decline for over a year, and there does not appear to be any end in sight for the slump. The company announced a series of layoffs in late January in order to curtail its overhead and squeeze some extra cash out of its margins. The company missed its number last quarter and the analyst community continues to downgrade their projections.
abercrombie and fitch (NYSE: ANF) is yet another company feeling the pain from curtailed consumer spending habits, due to numerous negative economic developments.
The company's share price has traded mostly sideways for the last 18 months, and is currently pressing the low-end of the previously mentioned range. Four of 20 covering analysts have lowered their current-year projections within the last 30 days. The consensus estimate now stands at $5.79 per share, down from the previous $6.00.
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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 32.2%. 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 abercrombie and fitch Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 129% annually ( 5.3% vs. 12.1%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
