Contrarian Ideas: 8 Downtrending Stocks Being Sold by Institutional Investors

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 |  Includes: BBY, CSCO, CX, HPQ, IBN, MCY, NRG, PBCT
by: Kapitall

The following is a list of stocks in a downtrend (trading below the 20-day, 50-day and 200-day moving averages). These companies have also seen net institutional selling and net mutual fund selling over the last two quarters.

Is there more downside to come, or is this a contrarian opportunity to buy in? You decide.

Institutional and mutual fund data sourced from Fidelity, short float, moving average, and performance data sourced from Finviz.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.

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The list has been sorted by institutional ownership as a percentage of shares outstanding.

1. NRG Energy, Inc. (NYSE:NRG): Electric Utilities Industry. Market cap of $4.83B.

The stock is currently -5.64% below its 20-day MA, -2.66% below its 50-day MA, and -7.18% below its 200-day MA.

Net institutional shares sold during current quarter at -7.3M vs. -6.2M net shares sold during previous quarter. Net mutual fund shares sold during current quarter at -12.2M vs. -8.3M net shares sold during the previous quarter.

Short float at 3.91%, which implies a short ratio of 3.39 days. The stock has lost -10.49% over the last year.

Other Highlights:

The company's capital spending accelerated by 46.12% over the last five years, much faster than the industry average of 10.65%. At least theoretically, this makes them more competitive over the coming years, since their operational assets are more up-to-date.

The company has demonstrated rapid cash flow growth over the last five years, which may lower their risk going forward. Five year average cash flow growth at 37.15%, much higher than the industry average at 20.65%.

2. Hewlett-Packard Company (NYSE:HPQ): Diversified Computer Systems Industry. Market cap of $92.81B.

The stock is currently -9.68% below its 20-day MA, -5.83% below its 50-day MA, and -2.50% below its 200-day MA.

Net institutional shares sold during current quarter at -99.1M vs. -164.6M net shares sold during previous quarter. Net mutual fund shares sold during current quarter at -52.7M vs. -24.7M net shares sold during the previous quarter.

Short float at 1.01%, which implies a short ratio of 1.2 days. The stock has lost -15.37% over the last year.

Other Highlights:

The company outperformed analyst earnings estimates during the most recent quarter, suggesting that the analyst community is underestimating the stock. The company reported earnings per share of $1.36 per share, and exceeded the First Call Consensus of $1.29 (Q1 Earnings on 02/22/11). The company also outperformed analyst estimates over the last year, reporting earnings per share at $4.58, beating the consensus view at $4.51 (based on the estimates of 32 analysts).

3. Cisco Systems, Inc. (NASDAQ:CSCO): Networking & Communication Devices Industry. Market cap of $103.32B.

The stock is currently -7.54% below its 20-day MA, -8.41% below its 50-day MA, and -14.41% below its 200-day MA.

Net institutional shares sold during current quarter at -394.7M vs. -129.0M net shares sold during previous quarter. Net mutual fund shares sold during current quarter at -44.4M vs. -47.9M net shares sold during the previous quarter.

Short float at 0.71%, which implies a short ratio of 0.55 days. The stock has lost -23.39% over the last year.

Other Highlights:

Judging by trailing twelve month (TTM) ratios like Return on Equity (ROE), Return on Assets (ROA) and Return on Invested Capital (ROI), it's clear that the company's management is doing an excellent job. TTM ROE at 16.99%, higher than the industry average at 13.92%, TTM ROA at 9.4% vs. the industry average at 9.33%, and TTM ROI at 12.64%, higher than the industry average at 12.17%. The company also outperformed its industry competitors in terms of the TTM Return on Sales ratio (17.89% vs. the industry average at 13.83%).

4. People's United Financial Inc. (NASDAQ:PBCT): Savings & Loans Industry. Market cap of $4.84B.

The stock is currently -0.71% below its 20-day MA, -2.91% below its 50-day MA, and -0.39% below its 200-day MA.

Net institutional shares sold during current quarter at -13.3M vs. -5.8M net shares sold during previous quarter. Net mutual fund shares sold during current quarter at -11.6M vs. -11.1M net shares sold during the previous quarter.

Short float at 6.99%, which implies a short ratio of 5.46 days. The stock has lost -12.95% over the last year.

Other Highlights:

Over the last year, the company has proven itself to be more profitable than its industry competitors. Trailing twelve month (TTM) gross margin at 83.17%, higher than the industry average at 44.33%. TTM EBITD margin at 39.31% vs. industry average at 32.97%, while TTM operating margin came in at 34.53%, higher than the industry average at 19.38%. The company also outperformed with its pretax margin, reporting a ratio of 11.26%, higher than the industry average at 6.5%.

5. Best Buy Co. Inc. (NYSE:BBY): Electronics Stores Industry. Market cap of $12.76B.

The stock is currently -4.18% below its 20-day MA, -5.86% below its 50-day MA, and -13.31% below its 200-day MA.

Net institutional shares sold during current quarter at -26.4M vs. -14.7M net shares sold during previous quarter. Net mutual fund shares sold during current quarter at -9.2M vs. -6.8M net shares sold during the previous quarter.

Short float at 4.46%, which implies a short ratio of 1.73 days. The stock has lost -9.96% over the last year.

Other Highlights:

When comparing the company's price relative to earnings, it's clearly undervalued. The P/E ratio, based on the most recent quarter's earnings, stands at 14.89, lower than the industry average at 23.54, while the P/E ratio, based on trailing twelve month earnings, stands at 9.69, which is lower than the industry average at 12.67. The company also appears to be undervalued relative to projected earnings growth. PEG ratio at 0.86, vs. an industry average at 1.15.

Judging by the company's cash holdings, shares look to offer good value at current levels. Price / Cashflow per Share, based on the most recent quarter's cash flow numbers, came in at 6.79, lower than the industry average of 13.93. It's also worth pointing out that the company's trailing twelve month Price / Cashflow per Share came in at 5.52, lower than the industry average of 11.83.

6. CEMEX, S.A.B. de C.V. (NYSE:CX): Cement Industry. Market cap of $8.7B.

The stock is currently -5.19% below its 20-day MA, -10.64% below its 50-day MA, and -5.01% below its 200-day MA.

Net institutional shares sold during current quarter at -6.7M vs. -26.2M net shares sold during previous quarter. Net mutual fund shares sold during current quarter at -6.2M vs. -5.1M net shares sold during the previous quarter.

Short float at 4.48%, which implies a short ratio of 5.07 days. The stock has lost -5.33% over the last year.

Other Highlights:

The company's capital spending accelerated by 3.29% over the last five years, much faster than the industry average of -2.65%. At least theoretically, this makes them more competitive over the coming years, since their operational assets are more up-to-date.

7. Mercury General Corporation (NYSE:MCY): Property & Casualty Insurance Industry. Market cap of $2.23B.

The stock is currently -0.80% below its 20-day MA, -3.65% below its 50-day MA, and -1.68% below its 200-day MA.

Net institutional shares sold during current quarter at -434.5K vs. -400.1K net shares sold during previous quarter. Net mutual fund shares sold during current quarter at -400.9K vs. -842.4K net shares sold during the previous quarter.

Short float at 2%, which implies a short ratio of 2.79 days. The stock has gained 4.64% over the last year.

Other Highlights:

Insiders appear to be optimistic on the outlook for the company. On a net basis, they've purchased an average of 10,837 shares per year (over last 2 years).

8. ICICI Bank Ltd. (NYSE:IBN): Foreign Regional Banks Industry. Market cap of $25.19B.

The stock is currently -0.87% below its 20-day MA, -5.25% below its 50-day MA, and -2.06% below its 200-day MA.

Net institutional shares sold during current quarter at -1.4M vs. -1.6M net shares sold during previous quarter. Net mutual fund shares sold during current quarter at -2.8M vs. -2.7M net shares sold during the previous quarter.

Short float at 1.22%, which implies a short ratio of 1.75 days. The stock has gained 16.45% over the last year.

Other Highlights:

The company has a track record of outperforming its competitors. Over the last five years, EPS grew by 9.71%, higher than the industry average at -2.82%, while revenues grew by 18.84%, outperforming the industry average at 12.31%.

The company has demonstrated rapid cash flow growth over the last five years, which may lower their risk going forward. Five year average cash flow growth at 13.07%, much higher than the industry average at 5.89%.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.