10 F-Rated Stocks to Sell in This Narrow Market

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The market took a tumble on Friday, with the Dow shedding more than 450 points. The pullback was largely due to the “inverted yield curve,” which in the past has been a sign that a recession is on the horizon. So, investors panicked and looked for stocks to sell.

Remember, an inverted yield curve is when short-term rates, like the three-month Treasury, move higher than the 10-year Treasury. This is exactly what happened on Friday. Not only that, but over in Europe, the German 10-year Bund yields slipped below 0%. This was due to a purchasing managers index (PMI) figure for the Eurozone that came in at the weakest reading in six years.

Luckily, the Federal Reserve remains very sensitive to global events like slowing growth in China and Europe, as well as weaker economic data here in the United States. The Fed is anticipating 2.1% U.S. GDP growth in 2019, so it can afford to be patient moving forward. This is why they’ve tapped the brakes on raising key interest rates in 2019. And last Wednesday’s dovish FOMC statement drove Treasury yields to their lowest level in the past 12 months.

As a result, we experienced a five-basis-point Treasury yield curve inversion that spooked the stock market.

Ultimately, the market was extremely overbought, so it was due for a breather. And the international flight to quality that’s already underway — due to the ongoing Brexit mess — will continue to drive investors back to more domestic stocks with strong fundamentals. Lower Treasury yields are bullish for these stocks, which will attract money that’s rotating out of bonds.

However, I should add that these fundamentally superior stocks are growing increasingly scarce. The stock market is growing “narrower,” especially with the 2019 pension funding season near an end and the first-quarter earnings season around the corner.

Many multinational companies will struggle during this upcoming earnings season. This is mainly due to more difficult year-over-year comparisons. So, the narrow stock market will “funnel” money into more domestic stocks that can maintain strong sales and earnings.

The bottom line: We are entering a stock pickers’ market. So, it’s more important than ever to stay laser-focused on stocks that can sustain strong earnings momentum.

As for the ones that can’t, well…look out below.

My advice at this “fork in the road” is to purposefully avoid companies that simply don’t measure up. And that’s just the sort of assessment I designed my Portfolio Grader to do.

Portfolio Grader assesses stocks on two key metrics: a Fundamental Grade and a Quantitative Grade.

With the fundamentals, I want to see strong growth in sales, earnings and operating margins, as well as positive earnings surprises, upward revisions in Wall Street analyst’s earnings forecasts, and strong cash flow, to name a few. Essentially, if a company is struggling to sell its products or is spending more than it makes, it’s not a stock that you want to own for growth.

That all being said — I’m even more interested in a stock’s Quantitative Grade. This basically tells us if it is experiencing strong buying pressure.

When money is flooding into a stock, it gives it great momentum to rise going forward. So, I believe in “following the money” — and these 10 are stocks to sell, as they are seeing extremely poor money flow, in addition to weak fundamentals:

Stock

Rating

Dean Foods (NYSE:DF) F
Legg Mason (NYSE:LM) F
Nomura Holdings (ADR) (NYSE:NMR) F
Nu Skin Enterprises (NYSE:NUS) F
Castle Brands (NYSEAMERICAN:ROX) F
Ryanair Holdings Plc (ADR) (NASDAQ:RYAAY) F
EchoStar (NASDAQ:SATS) F
TiVo (NASDAQ:TIVO) F
Tata Motors (ADR) (NYSE:TTM) F
XPO Logistics (NYSE:XPO) F

In the end, you’ll find it’s worthwhile to perform this “due diligence.” And whether you’re looking for stocks to buy or stocks to sell, my Portfolio Grader makes that simple and easy.

Now, there are plenty that are seeing positive momentum — in earnings/sales, as well as buying pressure. It’s just important to find the right ones.

The good news is that I’ve just recommended a stock for Accelerated Profits that knocks it out of the park in both respects. It’s such a strong company that it holds the number-one ranking on my Accelerated Profits Buy List.

This stock is still trading a little below my recommended buy limit, so now is the perfect time to check it out. If that interests you, click here to sign up and hear more.

Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth InvestorBreakthrough StocksAccelerated Profits and Platinum Growth. His most popular service, Growth Investor, 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.


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