I consider upward revisions to be powerful indicators of earnings surprises. Unfortunately, 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 unaware. So, I’ve been running the numbers and have isolated 10 of these “slippery slope” stocks.
Take a look at the 10 blue-chip stocks that investors should sell before earnings:
10 Blue-Chip Stocks on Slippery Slopes
- Amazon.com, Inc. (AMZN): In the past month, earnings estimates have plunged 74% for Amazon. Analysts now see a 64.7% drop in AMZN earnings for this quarter. AMZN is a “sell.”
- Barrick Gold Corporation (USA) (ABX): In the past three months, estimates for ABX stock have been revised down by 37%. Analysts now forecast a 16.2% drop in sales and a 67.6% plunge in earnings for Barrick Gold this quarter. ABX is a “strong sell.”
- Apache Corporation (APA): In the past three months, the consensus estimate for APA stock has plummeted by 33%. Analysts now expect a 38.9% drop in earnings for Apache this quarter. APA is a “strong sell.”
- BP plc (ADR) (BP): In the past 90 days, analysts have revised their estimates for BP down by 35%. The consensus now calls for a 22.2% reduction in BP earnings. BP is a “strong sell.”
- ConocoPhillips (COP): In the past 60 days, estimates have fallen by 42%. Analysts now expect a 4.2% year-on-year drop in sales and a 40.7% decline in ConocoPhillips’ earnings for this quarter. COP stock is a “sell.”
- Freeport-McMoRan Inc (FCX): In the past 90 days, analysts have slashed their estimates for FCX stock down by 47%. The consensus now calls for a 13.9% drop in sales and a 53.6% dive in Freeport-McMoRan’s earnings. FCX is a “strong sell.”
- Loews Corporation (L): In the past two months, estimates have fallen by 25% for L stock. Analysts now expect a 26.6% decline in Loews’ earnings for this quarter. L stock is a “strong sell.”
- Noble Energy, Inc. (NBL): In the past 90 days, the consensus estimate has plunged 43% for NBL stock. The consensus now calls for an 18% reduction in earnings for Noble Energy. NBL stock is a “strong sell.”
- Occidental Petroleum Corporation (OXY): In the past three months, estimates for OXY stock have been reduced by 41%. Analysts now expect a 45.3% drop in earnings for Occidental Petroleum this quarter. OXY stock is a “sell.”
- Vale SA (ADR) (VALE): In the past three months, estimates for VALE stock have been lowered by 33%. Analysts now expect a 30.9% drop in sales and a 67.7% plunge in earnings for Vale. VALE stock is a “strong sell.”
Fortunately, 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 Amazon into my stock screening tool, you’ll see that it receives an F 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 AMZN as our example, you can see that the consensus estimate has been moving around — from 69 cents per share 90 days ago to 18 cents per share currently.
With these tools at your disposal, there’s no reason not to stay on top of your stocks this earnings season. Now, that Alcoa Inc (AA) has reported earnings, more and more earnings reports will be released each day. So, make sure you don’t own any blue-chip stocks to sell!
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
