Dump These 10 Blue Chips Before Earnings

Downward revisions suggest selling these stocks makes sense today

   
Dump These 10 Blue Chips Before Earnings

Last week I covered five of the top blue chip stocks in terms of analyst earnings revisions for first-quarter earnings. If you had a chance to read it, I hope you’ve considered what I said about analyst earnings revisions. When push comes to shove, I consider upward revisions to be a powerful indicator of earnings surprises.

The reverse is true as well: Downward earnings revisions are not a good sign because they oftentimes precede upsetting quarterly results. Lately, analysts have been taking a more pessimistic stance on several S&P 500 companies–this has dragged down the consensus estimate for the index in the current quarter.

I don’t want anyone to be caught unawares, so I’ve been running the numbers and have isolated 10 of these “slippery slope” stocks.

Take a look:

  • General Motors (GM): In the past three months, estimates have been revised down by 24%. Analysts now forecast a 46.4% drop in sales and a 47.7% plunge in earnings for this quarter. HES is a sell.
  • Goldman Sachs (GS): In the past month, estimates have slipped by 9%. Analysts now see a 12.2% decline in sales and a 15.6% drop in earnings for this quarter. GS is a sell.
  • Hess (HES): In the past three months, the consensus estimate has plummeted by 52%. Analysts now expect just 3.5% annual sales growth and a 25.4% drop in earnings for this quarter. GM is a strong sell.
  • International Business Machines (IBM): In the past 90 days, analysts have revised their estimates down by 29%. The consensus now calls for a 2% drop in sales and a 15% reduction in earnings. IBM is a sell.
  • Mattel (MAT): In the past 60 days, estimates have fallen by 33%. Analysts now expect a 5.2% year-on-year drop in sales and a 27.3% decline in earnings for this quarter. MAT is a sell.
  • Newmont Mining (NEM) In the past 90 days, analysts have slashed their estimates down by 55%. The consensus now calls for a 14.9% drop in sales and a 73.2% dive in earnings. NEM is a strong sell.
  • Nordstrom (JWN): In the past two months, estimates have fallen by 15%. Analysts now expect just 4.3% annual sales growth and a 6.8% decline in earnings for this quarter. JWN is a sell.
  • Target (TGT): In the past 90 days, analysts have reduced their estimates down by 28%. The consensus now calls for just 2% sales growth and an 11% decline in earnings. TGT is a strong sell.
  • Tesoro (TSO): In the past 90 days, the consensus estimate has plunged 39%. The consensus now calls for 10% annual sales growth and a 5.5% reduction in earnings. TSO is a sell.
  • Weyerhaeuser (WY): In the past three months, estimates have been reduced by 14%. Analysts now expect just 6.8% annual sales growth and a 3.8% dip in earnings for this quarter. WY is a strong sell.

As I mentioned, there are two easy ways to check out how your holdings are perceived by the analyst community.

The first way is to use Portfolio Grader, which includes a letter grade for analyst earnings revisions. If you plug Apple (AAPL) into my stock screening tool, you’ll see that it receives a C for earnings revisions.

There are also several financial news websites which provide the latest earnings estimates for free. I personally like looking at Yahoo! Finance’s analyst estimates page for each stock. Using AAPL as our example, you can see that the consensus estimate has been moving around a bit–from $10.88 per share 90 days ago to $10.14 currently.

With these tools at your disposal, there’s no reason not to stay on top of your stocks leading up to first-quarter earnings season.

With April 7 fast approaching I strongly suggest you check up on your portfolio before then.


Article printed from InvestorPlace Media, http://investorplace.com/2014/04/blue-chips-stocks-to-sell-gm-gs-hes/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.