• BusinessWeek
• BusinessWeek Exchange

Search all of BusinessWeek.com:

Stock Screens

By Michael Kaye, CFA

Five Stocks to Flee

These issues carry the lowest scores in S&P's STARS and Fair Value ranking systems. Cross the street to avoid them

  STORY TOOLS

Printer-Friendly Version

E-Mail This Story

Reader Comments

  RELATED ITEMS

Stock Screens Archive

  PEOPLE SEARCH

Search for business contacts:

First Name :

Last Name :

Company Name :

PREMIUM SEARCH
Search by job title, geography and build a list of executive contacts

From Standard & Poor's Equity Research
Sometimes the best moves are the ones you don't make. In this column, we normally try to use various criteria to identify stocks that are attractive investment candidates. But equity analysis is also meant to turn up names that are unappealing, with poor prospects for capital appreciation. Every once in a while, we try to flag those issues that post weak scores under various analytical criteria to help investors avoid buying stocks they might regret later.

For this week's screen, we utilized Standard & Poor's Stock Appreciation Ranking System, or STARS, a qualitative measure, and its Fair Value rankings, with a quantitative orientation, to make our case. We started by sifting our database for those stocks with the two lowest STARS rankings, 1 STARS (strong sell) or 2 STARS (sell). Stocks with those designations are expected by S&P equity analysts to underperform the S&P 500 index on a total return basis over the coming 12 months, with share prices either not expected to show gains (in the case of 2 STARS) or to fall in price (1 STARS).

We then turned to S&P's Fair Value model, which calculates a stock's weekly Fair Value—the price at which it should trade at current market levels—based on fundamental data such as corporate earnings and growth potential, price-to-book value, return on equity, and current yield relative to the S&P 500. Stocks are ranked from 5, indicating significant undervaluation, to 1, indicating significant overvaluation. We sifted for those stocks ranked (significantly overvalued) or 2 (somewhat overvalued).

From this output, we looked for names which had seen their annual EPS rise in—at the most—one year over the last five-year period. The following five stocks fit the parameters. Needless to say, we do not recommend purchase of these stocks.

Company	Ticker
Ferrell Gas Partners	FGP
Lodgian	LGN
Mission West Properties	MSW
Post Properties	PPS
Qwest Communications	Q

Kaye, an analyst for Standard & Poor's Portfolio Services, is the author of The Standard & Poor's Guide to Selecting Stocks

 BW MALL   SPONSORED LINKS

• VMware Fusion 3  The Best Way to Run Windows on Your Mac, Only $79.99
• Mutual Funds at Fidelity  Benefit from years of mutual fund management experience.
• Online PHR Certificate Program w/ Villanova Univ  SHRM Approved HR Certificate Program from Villanova University. 100% Online - Find Out More Now!
• Your Customers Speak Email: Do You?  You Already Have What You Need to Maximize ROI: Your Current Customers.
• T. Rowe Price  No-load mutual funds and 401k rollover. Get Started Now.

Buy a link now!

Get BusinessWeek directly on your desktop with our RSS feeds.

Add BusinessWeek news to your Web site with our headline feed.

Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video.

To subscribe online to BusinessWeek magazine, please click here.

Learn more, go to the BusinessWeekOnline home page

Advertising | Special Sections | MarketPlace | Knowledge Centers

Terms of Use | Privacy Notice | Ethics Code | Contact Us

Copyright 2000- 2009 by The McGraw-Hill Companies Inc.
All rights reserved.