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Zacks.com featured highlights: Conns, ZELTIQ Aesthetics, PTC, DreamWorks Animation SKG and Covanta Holding


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For Immediate Release

Chicago, IL - July 29, 2016 - Stocks in this week's article include: Conns Inc. ( CONN ), ZELTIQ Aesthetics, Inc. ( ZLTQ ), PTC Inc. ( PTC ), DreamWorks Animation SKG Inc. ( DWA ) and Covanta Holding Corporation ( CVA ).

Screen of the Week of Zacks Investment Research:

Discard These 5 Toxic Stocks Now to Protect Your Portfolio

Investing in a stock whose current price is not rationally justified by its true potential is sure to result in loss over time. Identifying such bloated stocks accurately and dumping them at the right time can protect your portfolio.

Overpricing of these toxic stocks can be attributed to either an irrational exuberance associated with them or some serious drawbacks. And if you own such stocks for an inordinate period of time, you are likely to see significant erosion of your wealth.

However, if you can correctly detect such toxic stocks, you may gain in a bear market by resorting to an investing strategy called short selling. This strategy allows one to sell a stock first and then buy it when the price falls.

Naturally, short selling excels in bear markets, while it typically loses money in bull markets.

So, just like identifying promising stocks, detecting toxic stocks and dumping them at the right time is crucial to safeguarding one's portfolio from big losses or earning profits by short selling them.

Screening Criteria

Here is a winning strategy that will help you identify the over-hyped toxic stocks:

Most recent Debt/Equity Ratio greater than the median industry average : High debt/equity ratio implies high leverage. And high leverage indicates a huge level of repayment that the company has to make in connection with the debt amount.

P/E using 12-month forward EPS estimate greater than 40 : A very high forward P/E implies that a stock is highly overvalued.

% Change in F (1) and F (2) Estimate (12 Weeks) less than -5 : Negative EPS estimate revision for this and the next fiscal year during the past 12 weeks point to analysts' pessimism.

Zacks Rank more than or equal to #3 : We have not considered Buy-rated stocks that generally outperform the market.

Here are 5 of the 16 stocks that made it through the screen:

The Woodlands, TX-based Conns Inc. ( CONN ) is a specialty retailer which currently operates retail locations in Texas and Louisiana. Over the last 30 days, its current quarter estimate has remained unchanged at a loss of 2 cents per share. Conns carries a Zacks Rank #5 (Strong Sell).

Pleasanton, CA-based ZELTIQ Aesthetics, Inc. ( ZLTQ ) is a medical technology company. Over the past 30 days, its current quarter estimate has remained unchanged at a loss of 7 cents per share. The company has a Zacks Rank #4 (Sell).

PTC Inc. ( PTC ) is a Needham, MA-based software company engaged in developing, marketing and supporting software solutions. Over the past one-month period, the current quarter earnings estimate has declined around 19.4% to 29 cents. The stock currently has a Zacks Rank #5.

Glendale, CA-based, DreamWorks Animation SKG Inc. ( DWA ) is engaged in developing and producing computer generated animated feature films for a broad movie-going audience. Over the past one-month period, current quarter earnings estimate has widened from a loss of 2 cents per share to a loss of 5 cents. The stock currently has a Zacks Rank #4.

Covanta Holding Corporation ( CVA ) is a Morristown, NJ-based alternative energy company which provides waste and energy services in the U.S. and Canada. Over the past 30 days, its current quarter estimate has remained unchanged at a loss of 15 cents per share. The company has a Zacks Rank #3 (Hold).

Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks' portfolios and strategies are available at : https://www.zacks.com/performance .

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Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don't wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112

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Contact: Jim Giaquinto
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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 report

CONNS INC (CONN): Free Stock Analysis Report

ZELTIQ AESTHETC (ZLTQ): Free Stock Analysis Report

PTC INC (PTC): Free Stock Analysis Report

DREAMWORKS ANIM (DWA): Free Stock Analysis Report

COVANTA HOLDING (CVA): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: CONN , PTC , CVA


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