Nine Stocks to Avoid

When identifying possible sell/short opportunities (torpedoes) The Applied Finance Group (AFG) starts by running a screen using its proprietary Sell Criteria variables which starting with Economic Margin. Economic Margin is a corporate performance measure that identifies how profitable a company is by measuring how much the company earns above or below its cost of capital. In addition to corporate performance, AFG looks to identify those companies that are attractively priced using our valuation model. Lastly, AFG evaluates how well companies run their business using its Management Quality score, eliminating companies that have management teams that destroy wealth.

The 9 firms listed below all meet AFG’s Sell Criteria. In addition, these companies all earn less than their cost of capital which means they earn a negative Economic Margin and only 3 (ERTS, MOLX, SWK) have a Z-Score (Altman Z-Score) that were not in the at-risk range. AFG has a track record of identifying winners and losers in the market.

If any of these firms are holdings in your portfolio, pay extra attention to these companies as they contain all of the characteristics of a bad investment and may be a potential torpedo lurking in your portfolio. AFG has proven successful since 1996 at identifying good companies as well as sell opportunities, providing a solid buy/sell spread.

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Potential Torpedoes (S&P 500)

Comments

[SJD:]

Another advertisement SA should not permit. Are we to simply sell based upon this with no analysis whatsoever? I thought this was a medium for sharing info.

Mar 31 10:24 AM

[MN Dabbler:]

I think Value Expectations used to be called JT Marlin

Mar 31 11:22 AM

[toomuchgas:]

Their system must work well since they are so famous.

Mar 31 11:52 AM

[iqminus:]

Their early bird special expires in ten days, so sign up now!

Mar 31 01:10 PM

[Lea:]

WMI a sell? You'll have to explain yourself. It's presently between $25/$26 dollars, has a PE of 11, a 4,5% dividend, and 11% free cash flow.Why would you sell, please explain youself.

Mar 31 02:44 PM

[notsosmart:]

save this article. see how right or wrong in 6 mos. then tell all you know of the results.a great way to weed out those that know nothing.lots of them on this site.

Mar 31 04:54 PM

[User 386676:]

Sell FTR? Are you crazy? I just earned 28% in the last 21 days on it! And with a high dividend yield...

Apr 01 12:21 AM

[User 386676:]

Thank FTR!!! 31.67% gain since March 09, 2009!

Apr 01 04:59 PM

[From The Real:]

Uh, yeah, just got a sweet dividend from FTR, too, of .25 per. AKA 13.5% dividend yield. I will be HOLDING FTR, if not buying more. JT Marlin is not my father.

Apr 02 08:44 AM