Chicago, IL – May 1, 2023 – Stocks in this week’s article are Dutch Bros Inc. BROS, UBS Group AG UBS, CoStar Group, Inc. CSGP and Semtech Corp. SMTC.
Toxic stocks may prove to be a threat to the performance of a portfolio. Such stocks may appear lucrative at first but turn out to be risky as one digs deeper. The risk of owning toxic stocks can be eliminated if investors remain vigilant about the performance of every stock that they own in their portfolio.
The performance of a stock mainly depends on the underlying strength of the company, which, in turn, is dependent on financial flexibility, legal standing and management’s decisions. Most companies issue debt to raise money to grow their businesses. But the problem begins when those companies are unable to generate enough profits to pay off their liabilities. Stock prices of such insolvent companies get wiped out within a few days or even within a few hours.
Such companies can be identified by careful examination of their financial statements, which reflect the financial position of the company. If the intrinsic value of the company appears lower than its stock price, the stock becomes overvalued and is prone to losing its value over time. This is when investors should consider discarding the stock.
The stock price of a company also depends on management’s decision and legal challenges associated with the company. If management is inexperienced or has a track record of making poor decisions, the company’s future and ultimately the performance of the stock are bound to go downhill. Investors can prevent themselves from such risks by keeping abreast of latest news on the company.
Diversification offers an opportunity to avoid the magnitude of losses associated with the risk of owning toxic stocks. Through diversification, one can invest in different stocks from different asset classes to limit their exposure to a particular stock.
The detection and removal of a toxic stock at the correct time is crucial to overall portfolio health. If investors can accurately determine toxic stocks, they can take advantage of short selling, which is the process of selling stock at higher prices and buying them back at lower prices.
Dutch Bros Inc., UBS Group AG, CoStar Group, Inc. and Semtech Corp. are a few toxic stocks that you should dump from your portfolio.
Here are four of the 25 toxic stocks that showed up on the screen:
Dutch Bros is an operator and franchisor of drive-thru shops, which focus on serving high-quality, hand-crafted beverages with unparalleled speed and superior services. The Zacks Consensus Estimate for BROS’s 2023 bottom line is pegged at a profit of 20 cents per share.
The consensus mark has moved south from earnings of 36 cents per share to earnings of 20 cents per share over the past 90 days. Dutch Bros missed earnings estimates in two out of the last four quarters and beat once, with the average negative surprise being 11.9%. The company carries a Zacks Rank #5 (Strong Sell) and has a VGM Score of D.
UBS is a bank and the core operating company of the UBS Group. The Zacks Consensus Estimate for the 2023 bottom line is pegged at a loss of 69 cents per share, implying a year-over-year deterioration of 130.67%.
The consensus mark has moved south from a loss of 63 cents per share to a loss of 69 cents per share over the past seven days. UBS beat earnings estimates in two out of the four trailing quarters and missed twice, with the average surprise being 2.09%. The company carries a Zacks Rank #4 (Sell) and has a VGM Score of F.
CoStar provides information services to the commercial real estate industry. The Zacks Consensus Estimate for CSGP’s 2023 bottom line is pegged at a profit of $1.09 per share, implying a year-over-year deterioration of 14.17%.
The Zacks Consensus Estimate for the firm’s 2023 earnings has moved south from $1.16 per share to earnings of $1.09 per share over the past 60 days. CoStar beat earnings estimates in all four trailing quarters, with the average surprise being 21.52%. The company carries a Zacks Rank #4 and has a VGM Score of F.
Semtech designs, manufactures and markets a wide range of analog and mixed-signal semiconductors for commercial applications. The Zacks Consensus Estimate for SMTC’s 2023 bottom line is pegged at a profit of 48 cents per share, implying a year-over-year deterioration of 82.86%.
The Zacks Consensus Estimate for the firm’s 2023 bottom line has moved south from earnings of $2.16 per share to earnings of 48 cents per share over the past 30 days. Semtech beat earnings estimates in three out of the four trailing quarters and missed in one, with the average surprise being 2.18%. The company carries a Zacks Rank #4 and has a VGM Score of F.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2086870/discard-these-4-toxic-stocks-to-safeguard-your-portfolio
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: https://www.twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
UBS Group AG (UBS) : Free Stock Analysis Report
Semtech Corporation (SMTC) : Free Stock Analysis Report
CoStar Group, Inc. (CSGP) : Free Stock Analysis Report
Dutch Bros Inc. (BROS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
