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): KLA Tencor (NASDAQ: KLAC) and Apogee Enterprises, Inc. (NASDAQ: APOG). Further, Zacks announced a #4 Ranking (Sell) on another widely held stock: Hanesbrands, Inc. (NYSE: HBI). 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 KLAC and APOG 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:
KLA Tencor (NASDAQ: KLAC) touched its new 52-week low on Wednesday after an analyst downgraded the stock, saying peer Applied Materials (NASDAQ: AMAT) was making inroads into the company’s reticle inspection business. The chip equipment maker posted a 48% drop in its fourth-quarter profit, reported in July. KLA Tencor does not expect sales to rebound due to the ongoing credit crunch. Analysts have consistently reduced their profit forecast for the company stuck in a cyclical slowdown and now expect it to report $1.67 per share in 2009.
Apogee Enterprises, Inc. (NASDAQ: APOG) guided to lower 2009 profit earlier this month, citing project delays and cancellations. The glassmaker now sees EPS of $1.65-$1.82, down from its prior forecast of $1.82-$1.94. Analysts speculate that weakness in nonresidential construction could produce a prolonged slowdown due to the ongoing turmoil in the credit and financial markets. They have slashed their 2009 estimates on Apogee by 13 cents in the past week to $1.67 per share. The stock has a P/E of 9.3X, much higher than the industry.
Here is a synopsis of why HBI has 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;
Hanesbrands Inc (NYSE: HBI) on Wednesday said it will close nine plants in a restructuring move, affecting about 16% of its workforce. The company had missed analyst estimates in the second quarter, reported in July, due to weak sales trends in its innerwear segment. Quarterly sales fell 4.4% to $1.07 billion. In the last week, analysts have trimmed their 2008 profit estimates for the company by 3 cents to $2.27 a share, down from $2.37 per share two months ago.
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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 +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.
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