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): Healthways Inc. (NASDAQ: HWAY) and Williams-Sonoma Inc. (NYSE: WSM). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: Blyth Inc. (NYSE: BTH) and Sealy Corp. (NYSE: ZZ). To see the full Zacks #5 Rank List - Stocks to Sell Now visit: http://at.zacks.com/?id=92
Since inception in 1988, the S&P 500 has outperformed the Zacks #5 Rank List — Stocks to Sell Now by 81% annually (+2% versus +11%). 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 HWAY and WSM 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:
Healthways Inc. (NASDAQ: HWAY) hit its lowest mark in five years after the company forecast first-quarter profit below market expectations. The healthcare management provider said it expects quarterly EPS of 34 cents to 37 cents due to contract losses and renegotiations. Healthways' high-priced services are losing ground as medical costs continue to rise and consumers look to minimize discretionary investments. The company will provide 2009 guidance only in February, which analysts see as a sign of further weakness. Analysts are projecting EPS of $1.51 in fiscal 2008.
Williams-Sonoma Inc. (NYSE: WSM) shares recently fell further after the retailer posted a 29 percent drop in quarterly profit and slashed its 2008 outlook. The home décor retail segment most affected by the economic downturn. The company forecast 2008 EPS of $1.03-$1.15 versus its prior view of $1.45-$1.58. Weakening sales trends have continued through August and are worst in cities most affected by the housing crisis. Analysts now expect 2008 EPS of $0.98, down from last month’s projection of $1.36.
Here is a synopsis of why BTH and ZZ 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;
Blyth Inc. (NYSE: BTH) recently sank to its lifetime low after the candle maker’s second-quarter profit fell 6% and management trimmed its guidance for fiscal 2009. The company blamed inflationary pressures and lackluster U.S. sales for its disappointing performance. It now expects 2009 EPS of $1.35-$1.40, down from $1.45-$1.50. Blyth is focusing on promotions but has not been able to completely offset rising input costs with higher pricing. Analysts have cut their 2009 EPS estimates by 7 cents to $1.20 in the past week.
Sealy Corp. (NYSE: ZZ) reported a 6.6% drop in second-quarter revenue as cash-strapped consumers stayed away from its expensive mattresses. Analysts do not expect sales in the U.S. to improve this year, or even in the first half of 2009. The company is now trying to lure buyers through discounts and new products, which can further hurt profits. Sealy is also laden with debt and interest payments that will further add to the company’s troubles. Analysts expect the company to earn 46 cents a share in 2008.
Truly taking advantage of the Zacks Rank requires the understanding of how it works. The free special report; “Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions” is available to provide this insightful background. Download a free copy now to prosper in the years to come at http://at.zacks.com/?id=93
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 +30%. 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 underperformed the S&P 500 by 81% annually (+2% versus +11%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Contact: Michael Vodicka
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