Posted by: Aaron Pressman on October 31, 2007
Trader, investor and blogger extraordinaire Charles Kirk of The Kirk Report blog is out with his second annual list of “spooky stocks” just in time for perusing before you head out trick or treating. The list of about three dozen companies grows out of Kirk’s research looking for the best stocks but, in this case, he’s reversed the polarity and chosen a group of likely duds.
Kirk’s track record of combining fundamental research with suspect trading patterns is excellent. Stocks on last year’s list, which had about half as many entries, mostly did perform dismally. The average return over the next year was a loss of 17% versus the S&P 500’s gain of about 13%. Only three of the fifteen stocks beat the S&P and six had losses of more than 50%, “led” by Restore Medical (Symbol: REST) and Syntroleum Corp. (SYNM), each down about 63%. Youch.
This year’s much longer list has a few sector themes. One obvious theme for the duds is the still-smoldering real estate melt down. Included for 2007 are Restoration Hardware (RSTO), Builders FirstSource (BLDR), Brookfield Homes (BHS), Standard Pacific (SPF) and at least another eight stocks connected in some way to slowing home construction or slumping home prices. He’s also piercing the hype on alternative energy by including Green Plains Renewable Energy (GPRE) and Aventine Renewable Energy (AVR). The complete list is obviously worth checking out and comparing to your portfolio. Better to opt for a treat than get tricked again.