Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.
One such stock that you may want to consider dropping is Lumber Liquidators Holdings, Inc.
), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #5 (Strong Sell) further confirms weakness in LL.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 7 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from $3.36 a share a month ago to its current level of $2.73.
Also, for the current quarter, Lumber Liquidators Holdings has seen 6 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 60 cents a share from 92 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 28.2% in the past month.
So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don't have a long time horizon to wait.
If you are still interested in the Building Products sector, you may instead consider some better-ranked stocks including DR Horton Inc.
), Simpson Manufacturing Co., Inc.
) and Beazer Homes USA Inc
. ( BZH
). While DR Horton and Simpson Manufacturing Co carry Zacks Rank #1 (Strong Buy), Beazer Homes USA carries Zacks Rank #2 (Buy) and may be better selections at this time.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportLUMBER LIQUIDAT (LL): Free Stock Analysis ReportD R HORTON INC (DHI): Free Stock Analysis ReportSIMPSON MFG INC (SSD): Free Stock Analysis ReportBEAZER HOMES (BZH): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research