Stocks to Sell in March
Triple-digit Dow swings seem to be the norm in the past two weeks, as emotional investors are swayed by headlines and oil prices. But this extreme volatility is on very low volume, indicating a possible lack of commitment on the part of major institutions. However, the overall trend remains up, for now. But in this fickle market environment, investors would be wise to unload the weaker stocks in their portfolios on one of the big up days.
Listed below are stocks to sell (or simply avoid) either because of poor relative performance or because they have been accepted by investors as “bond substitutes.” The latter are especially vulnerable to selling in periods of lower bond prices and higher interest rates, and they offer little in the way of inflation protection.
If the market does sell-off in a big way, these stocks will likely be some of the unluckiest. Without further ado, here are your stocks to sell for March:
Stock to Sell #1 – Allstate Corp. (ALL)
Allstate Corp. (NYSE: ALL) is the second largest U.S. personal lines property casualty insurer. The company has had an erratic earnings history. Risks from casualty claims are high and underwriting results are only “modestly profitable,” according to S&P, which has a hold on the stock.
ALL’s long-term downtrend began in early 2007, when it sold for over $66. Following its bear market low, the stock bounced from $15 to the low $30s, but hasn’t been able to break from that sideways trend since then.
This is a stock that some investors hold because of name recognition, but it is clearly an underperformer and should be sold.
Stock to Sell #2 – Avon Products (AVP)
Avon Products (NYSE: AVP) is the world’s leading direct marketer of cosmetics, toiletries, fashion jewelry and fragrances. But the company’s earnings history is less than stellar. Even though the company may increase earnings from $1.81 to $1.86, there are heavy risks from a recent reorganization, as well as the higher cost of supplies due to inflation abroad.
The stock is in a downtrend and selling well under its 200-day moving average. S&P has a “sell” on AVP.
Stock to Sell #3 – Bristol-Myers Squibb (BMY)
Leading drug maker Bristol-Myers Squibb (NYSE: BMY) has been in a sideways trend for years. The reasons why? Years of relatively flat growth and earnings due to competition from generic drug makers, and risks associated with the development of new drugs and regulatory approval are just a few.
Technically, the stock is selling under its 200-day moving average, and even though it provides an annual dividend yield of over 5%, an increase in overall interest rates would work against the stock.
S&P has a “hold” on the stock. Sell BMY for better growth opportunities.
Stock to Sell #4 – Colgate-Palmolive (CL)
Major consumer products company Colgate-Palmolive (NYSE: CL) has been trading sideways since mid-2009, due to flat profit margins and revenues. Competition for household products is high, and CL has failed to control costs. Also, higher raw material costs could negatively impact future earnings.
Technically, the stock is in a sideways bear trend and selling below its 200-day moving average. S&P has a “sell” on the stock.
Stock to Sell #5 – Health Care REIT (HCN)
Health Care REIT (NYSE: HCN) is a real estate investment trust that invests in health-care facilities, including senior housing and specialty care, and medical office buildings.
HCN has maintained its price chiefly because of a relatively high dividend yield, which is currently at 5.39%. But S&P believes that “despite a rebounding economy,” they do not expect a “material pickup in organic revenues.” Since HCN has risen principally because it is considered a “bond substitute,” a rise in interest rates could significantly impact the price of the stock.
Technically, HCN is at a triple-top and selling is accelerating. Sell now.
Stock to Sell #6 – Plum Creek Timber (PCL)
Real estate investment trust Plum Creek Timber Co. (NYSE: PCL) is the largest private timberland owner in the United States. But PCL operates in a very cyclical industry, and several analysts have concluded that their analysis shows that the stock is adequately valued at around $40.
At a dividend yield of 4.05%, the stock has been a “bond substitute,” and with bond interest rates rising, the stock could be subjected to selling pressure.
Technically, PCL is at a double-top with a pick-up in selling, and is at the top of a five-year sideways trend. S&P rates the stock a “hold.”
