The market has roared back to life in amazing fashion. So most stocks have seen great price appreciation and scoring quite well with our exclusive POWR Ratings system. Therefore a stock that is so weak during the bull rally that it falls to a POWR Rating of D or F (Sell or Strong Sell) is a noteworthy event that should have you fearful of share ownership.
Every market day we update the POWR Ratings and these 3 stocks emerged as newly sell rated shares. Citigroup, TowneBank and Stoneridge. Read on to find out more…
Financial services is clearly not the best business to be in these days. Though C was once one considered an elite provider of financial services, the POWR Ratings now tell a different story.
C is currently rated a D in the POWR Ratings with a D Trade Grade and a D Buy & Hold Grade. Take a look at C’s price returns across the past couple months and you will find this metric paints quite the gloomy picture. The stock’s 6-month price return is -26.40%, its 3-month price return is -9.54% and its one-year price return is -13.92%.
The stock is nowhere near its pre-covid trading range of $70 to $80 and probably won’t return to this trading range until well beyond the current economic trough. This just might be the perfect stock to fade with short-selling.
This just might be the worst possible time to invest in a bank. Banks have inherently limited growth potential, are seeing a considerable reduction in foot traffic and preparing to take massive losses as clients default on loans of varying sorts.
TOWN and other banking stocks that provide loans and financial services to small and medium size businesses will continue to be downgraded in the POWR Ratings in the months ahead. After all, these small-timers are likely to be hit the hardest when all is said and done following the coronavirus outbreak and subsequent corporate-friendly bailout from the federal government.
TOWN recently dropped from a C POWR Rating grade to a D grade. The stock has Ds in every POWR Ratings category but for its Peer Grade of C. In other words, TOWN shareholders should consider jumping ship. TOWN price returns are negative across the past three months, six months, one-year and three-year time periods. The stock’s 6-month price return is nearly -30%.
In fact, buying a put option on this beleaguered stock might prove prudent. Look for TOWN to trend downward, possibly to its 52-week low of $15.03 in the third quarter.
The automotive industry is one of the worst places to put your money at the current moment, that is unless you are investing in Tesla (TSLA). Aside from a few bright spots, the auto industry is quite downtrodden as consumer spending has come to a grinding halt.
SRI has been downgraded as a result of the auto industry’s woes. This independent manufacturer and designer of automotive electrical components could be in the doldrums until the vehicle market emerges from its current downswing.
SRI has Ds across the POWR Ratings Board. The stock’s sole POWR Component above the D level is its Industry Rank, grading out as a B. The stock is ranked 35th of 50 in the Auto Parts industry.
Delve into SRI’s price returns and you will find it has a -30.23% 6-month return and a -21% one-year price return. Furthermore, the average analyst price target for SRI is $20, meaning it is overvalued at its current trading price of $21.82.
Do not consider establishing a position in SRI until the economy is picking up steam and interest in trucks as well as off-highway vehicles returns to or near pre-covid levels.
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C shares were trading at $54.30 per share on Thursday afternoon, up $0.96 (+1.80%). Year-to-date, C has declined -30.85%, versus a -2.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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