In looking though our portfolio, it’s time to pare down some exposure and make some calls on selling off selected stocks. For June I am recommending selling four stocks in particular.
Baidu (NASDAQ:BIDU) reported strong earnings late last month — beating analyst estimates for earnings and coming in line with revenue expectations. However, the company’s forward guidance was a bit weaker than investors wanted to see, and the stock has lost a bit of momentum. Plus, over the past year this stock has gone from a reliable, Conservative stock to Moderately Aggressive and now Aggressive ranking.
Check Point Software
I want to sell Check Point Software (NASDAQ:CHKP), an Israeli company that is a leader in Internet security — it is particularly known for its ZoneAlarm security system.
The company reported solid operating results for the first quarter; however, soft guidance for the second quarter has led buying pressure to dry up in recent weeks.
CPFL Energia (NYSE:CPL) is a major electricity provider in Brazil with a hefty dividend yield. However, the company recently reported a drop in first-quarter profit as its debt service costs increased. Profits in the first quarter declined by 9.9% as revenue ticked 13.2% higher. The stock has also seen investor interest decline because Brazil’s GDP growth rate has moderated in recent month — economists now expect 3.2% growth for 2012. This is an uptick from 2011’s 2.7% GDP growth, but remains far below the 7.5% growth seen in 2010.
I want to close our position in Herbalife (NYSE:HLF). This was a rough ride, and I laid an egg with this pick. While the company posted record sales and earnings results that were better than analyst estimates, the stock was hit hard after famous hedge fund manager and short-seller David Einhorn asked some questions regarding Herbalife’s accounting transparency, which immediately caused the stock to plummet.
Although many analysts have defended the company and aggressively revised their consensus earnings estimate 9.6% higher in the past three months, and Herbalife has been aggressively buying back its outstanding stock, unfortunately Einhorn has succeeded in tainting the company, and it may take a while for the stock to recover.
As a result, it’s time to cut our losses in the company to buy a better stock with more near-term price appreciation potential.