Markets

Zacks.com featured highlights: Covanta Holding, PTC, Etsy, Vertex Pharmaceuticals and Live Nation Entertainment

A generic image of a newspaper with Stock Market as the Headline.
Credit: Shutterstock photo

For Immediate Release

Chicago, IL - May 18, 2017 - Stocks in this week's article include Covanta Holding Corporation (NYSE: CVA - Free Report ), PTC Inc. (NASDAQ: PTC - Free Report ), Etsy, Inc. (NASDAQ: ETSY - Free Report ), Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX - Free Report ) and Live Nation Entertainment, Inc. (NYSE: LYV - Free Report ).

Screen of the Week of Zacks Investment Research:

5 Toxic Stocks to Steer Clear Of or Sell Short

Investors who can precisely identify overpriced stocks are likely to emerge winners. In practice, the correctly priced stocks and the overblown toxic stocks are mingled in the market place in such a way that it becomes tough to identify them. Investors who can figure out the overpriced stocks and shun them at the right time are the ones who are likely to benefit.

Generally, toxic stocks are vulnerable to external shocks and burdened with huge debts. In fact, the unreasonably high price of the toxic stocks is short-lived as the current price of these stocks is higher than their intrinsic price. So, quite obviously, if you own such toxic stocks for a very long period of time, you are sure to see huge loss in your wealth.

High price of the toxic stocks can be ascribed to an irrational exuberance associated with them or some serious fundamental lacunae. Presence of such stocks in your portfolio may result in loss of wealth.

However, if you can precisely spot the toxic stocks, you may gain by resorting to an investing strategy called short selling. This strategy allows you to sell a stock first and then buy it when the price falls.

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

So, just like owning stocks with growth potential, distinguishing toxic stocks and discarding them at the right time is the key to guard your portfolio from big losses or make profits by short selling them.

Screening Criteria

Here is a winning strategy that will help you to identify overpriced toxic stocks:

Most recent Debt/Equity Ratio greater than the median industry average : High debt/equity ratio implies high leverage. 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 50 : 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 points to analysts' pessimism.

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

Here are five of the 26 toxic stocks that showed up on the screen:

Covanta Holding Corporation (NYSE: CVA - Free Report ) is a Morristown, NJ-based alternative energy company that provides waste and energy services in the U.S. and Canada. Over the past 30 days, its second-quarter 2017 estimate widened from a loss of 11 cents per share to a loss of 15 cents. The company has a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

PTC Inc. (NASDAQ: PTC - Free Report ) is a Needham, MA-based software company engaged in developing, marketing and supporting software solutions. Over the past one-month period, the current quarter estimates declined 26.1% to 17 cents. The stock currently has a Zacks Rank #3.

Etsy, Inc. (NASDAQ: ETSY - Free Report ) is a Brooklyn, NY-based Internet services company. It operates a marketplace to make, sell and buy goods online and offline worldwide. Over the last 30 days, its current quarter estimate changed from a break-even point to a loss of a penny per share. The company has a Zacks Rank #3.

Boston, MA-based, Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX - Free Report ) is a bio-technology company. Over the past one-month period, the second-quarter 2017 estimate declined 66.7% to 5 cents a share. The stock currently has a Zacks Rank #3.

Live Nation Entertainment, Inc. (NYSE: LYV - Free Report ) is a Beverly Hills, CA-based live entertainment company. Over the past seven days, its second-quarter 2017 estimate remained unchanged at 17 cents a share.

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.

Click here to sign up for a free trial to the Research Wizard today .

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.

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

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

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros .

Get the full Report on CVA - FREE

Get the full Report on PTC - FREE

Get the full Report on ETSY - FREE

Get the full Report on VRTX - FREE

Get the full Report on LYV - FREE

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Contact: Jim Giaquinto

Company: Zacks.com

Phone: 312-265-9268

Email: pr@zacks.com

Visit: https://www.zacks.com/performance

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .

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

Covanta Holding Corporation (CVA): Free Stock Analysis Report

PTC Inc. (PTC): Free Stock Analysis Report

Etsy, Inc. (ETSY): Free Stock Analysis Report

Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report

Live Nation Entertainment, Inc. (LYV): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

VRTX LYV CVA ETSY PTC

Other Topics

Stocks

Latest Markets Videos