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Zacks Issues Sell Recommendations On Starwood Hotels |
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CHICAGO--(BUSINESS WIRE)--Jan. 2, 2003--Zacks.com releases details on a group of stocks that are part of their exclusive list of Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell). Note that since the Zacks Ranks inception in 1980, the list of #5 ranked stocks have under-performed the S&P 500 by 89.8%. |
While the rest of Wall Street continued to tout stocks during the market declines of the last few years, we were telling our customers which stocks to sell in order to save themselves the misery of unrelenting losses. Among the #5 ranked stocks today we highlight the following companies: Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) and Agnico-Eagle Mines Limited (NYSE:AEM). Further they announced #4 Rankings (Sell) on two other widely held stocks: Duke Energy Corporation (NYSE:DUK) and Red Hat, Inc. (NASDAQ:RHAT).
Here is a synopsis of why these stocks have a Zacks Rank of 5 (Strong Sell) and should most likely be sold or avoided for the next 1 to 3 months. Note that a #5/Strong Sell rating is applied to 5% of all the stocks we rank:
Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) is one of the world's largest hotel operating companies. HOT reported third quarter earnings of 26 cents a share, excluding special items, which was 2 cents below Wall Street's forecast but almost doubled its year-ago performance for the same quarter. Revenue nudged up slightly as well. However, the company said the global economic environment is challenging as business and trans-oceanic travel remain depressed, which hit its urban portfolio particularly hard. In the past 90 days, estimates for this year and next have receded by about 22 cents and 35 cents respectively. The company has also had to sell some of its hotels to shore up its balance sheet and its bond rating status might be cut to junk by S&P. HOT plans to drive earnings and cash flow through additional cost containment and strategic spending in 2003, while continuing to strengthen its brands. Such a strategy should help the company weather the economic storm, but HOT will most likely remain under pressure until its market picks up and the business traveler returns. In the meantime, investors may want to refrain from opening or deepening a position in HOT until its estimates get some upward momentum.
Agnico-Eagle Mines Limited (NYSE:AEM) is an established Canadian gold producer with operations located principally in northwestern Quebec and exploration and development activities in Quebec, Ontario and Nevada. Although the price of gold has been going through the roof, AEM missed third quarter EPS estimates by a substantial margin. The Street was expecting a 6 cent gain, and the company announced a 1 cent loss. This was primarily caused by lower production in its La Ronde mine, however the company is reporting that it is now operating at the planned expanded rate of 7,000 tons per day. As a result, gold production in the fourth quarter is expected to achieve record levels. On the positive side, AEM recently announced that a dividend of 3 cents per share will be paid to shareholders. This represents the 23rd consecutive year that Agnico-Eagle has paid a distribution to its shareholders. Even though the company struggled in the third quarter, analysts are hopeful that the company will finish strong in the fourth. Until then however, it might be a better bet to refrain from buying shares in AEM.
Below is a synopsis of why these two stocks have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next 1 to 3 months. Note that a #4/Sell rating is applied to 15% of all the stocks we rank:
Duke Energy Corporation (NYSE:DUK) is an integrated energy and energy services provider with the ability to offer physical delivery and management of both electricity and natural gas throughout the U.S. and abroad. In late October, the company reported third quarter ongoing earnings, excluding certain items, of 52 cents a share. That result fell short of Wall Street's predictions and its year-ago performance. That also made its second double-digit negative EPS surprise in four quarters. The company still expects full-year 2002 ongoing earnings of $1.95 to $2.05, which is within analysts' predictions, but said that market conditions could send results to the lower end of that range. Furthermore, the company warned that 2003 earnings should be flat and could be below 2002's result if the North American merchant energy market does not improve. Despite the uncooperative environment, DUK has taken several actions that should help the company advance once its market does. In the meantime though, it's probably best to hold off on a position in DUK until analysts start to bump up its estimates.
Red Hat, Inc. (NASDAQ:RHAT) is a developer/provider of open source software and services, including Red Hat Linux operating system, whose publicly available source code can be copied, modified and distributed with minimal restriction. Since Linux software is free, or open source, Red Hat draws in revenue by offering subscriptions for regular software updates and providing services to corporations. This has been a tough economic environment for companies like Red Hat, but things are starting to turn around albeit slowly. RHAT posted its first ever quarterly net profit while revenue rose 21% on higher sales of subscriptions. That compared with a net loss of $15 million, or 9 cents per share, a year earlier. The company looks to be turning the corner, but it still might be a little early in the game to deepen any existing positions or buy new shares at this time. It might only be a matter of time before this software provider is red hot.
To truly take advantage of the Zacks Rank, you need to first understand how it works. That's why we created the free special report; "Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions." Download your free copy now to prosper in the years to come. http://freezrguidebw.zacks.com/
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