They're some of the most talked-about and well-known stocks on the market. But I wouldn't touch them with a 10-foot pole.
That's because according to the most successful indicator in StreetAuthority's history, they're all rated as a "sell."
We spend a lot of time here at StreetAuthority talking about which stocks to buy -- and rightfully so. We also dedicate these pages to our thoughts on what it takes to be successful at investing. And knowing what to stay away from is oftentimes just as important as knowing what to buy.
So today, I'm going to share with you a list of 10 stocks you should absolutely stay away from. And if you own any of them, consider getting out as soon as possible.
According to our indicators, tough times are likely ahead for any investor that owns these stocks. Sure, they won't underperform forever. Things can change over time. But as of right now, all signs point to more pain ahead.
Before I show the list to you, you should know that these numbers come straight from my colleague Jimmy Butts, who runs StreetAuthority's Maximum Profit system. Jimmy, along with a select team of experts from diverse backgrounds, developed and perfected a unique set of "buy" and "sell" signals that is unlike anything you've probably used in your investing career.
This system is used to identify solid companies with momentum behind them so that Jimmy and his followers can swoop in and ride the wave to market-beating gains. And in doing so, this service has amassed the best track record of performance of any StreetAuthority newsletter over the past two years.
Now back to the list...
Keep in mind that these 10 "sells" aren't your usual suspects. You'd probably expect the list to be chock full of energy names. After all, it was the worst-performing sector in 2015 (down 22%). And despite a modest rebound, oil prices still remain far below their highs. But according to our research, that's not the only area of weakness in the market...
If you aren't familiar, let me break down how we got the two scores you see in the table above.
The first number, relative strength ( RS ), compares the price performance of a stock against every other stock in the market. The lower a stock's score, the worse its performance relative to peers. It's a tool that helps us numerically define stocks in an uptrend or downtrend.
But more important, numerous studies have proven that stocks with high RS are more likely to continue to outperform the market, while stocks with low RS underperform.
The second number (CFRS) is a tool we developed in-house. It stands for cash flow relative strength.
Measuring cash flow is one of the best ways to assess the health of a business. Since cash is the lifeblood of any business it stands to reason that a company that is growing cash flow is in a better economic position to continue growing its business than one that isn't.
It's also been called one of the most "honest" numbers a company's financial statements. That's because it's the one number that most accurately depicts a business' economic health. Or to put it more bluntly, it's the hardest to fake.
Just as Jimmy and his Maximum Profit followers use this system to make their buys, they also use it to know when to sell a particular holding.
For Jimmy to recommend a "buy," a stock must score in at least the 30th percentile for both RS and CFRS -- i.e. a score of 70 in each category. This number is then averaged to come up with a stock's Maximum Profit score. If a stock doesn't pass muster on either score, Jimmy and his followers don't even bother with it.
By combining RS of cash flow with traditional RS, Jimmy and his subscribers only own companies that are doing well fundamentally -- and only when the stock is beating the market. The result is a system that has consistently beats the market.
The Maximum Profit system's goal is simple: uncover what works -- and what doesn't -- so that you can beat the market in any environment. The Maximum Profit scores in the table above are some of the lowest Jimmy has ever seen. As such, you'd be well advised to stay away.
For the record, many of the picks Jimmy and his readers have uncovered went on to gain 39%... 46%... even 181% -- all in less than 13 months. And as I mentioned before, it's become StreetAuthority's best-performing system .
I can't guarantee that what has worked in the past will work in the future, but I know that this system is robust and works across many market cycles. If you'd like to learn more about Jimmy's system, you can visit this link .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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