As the momentum strategist at Zacks I would never make the argument that a stock has simply gone too far too fast as my primary reason for selling a stock. In fact, I go out of my way to look for stocks that have been on long term runs and usually add them to my portfolio on pullbacks. I’m certainly a “Buy high, sell higher” type of guy.
So don’t think that my argument for being cautious on today’s Bear of the Day is based on the fact that it’s been on such a great run. My reason for naming Advance Auto Parts (AAP – Analyst Report) theBear of the Day is in the action of analysts at other firms and AAP’s own earnings struggles.
Advance Auto Parts, Inc., through its subsidiaries, provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. It offers automotive parts, including alternators, batteries, belts and hoses, brakes and brake pads, chassis parts, climate control parts, clutches, driveshafts, engines and engine parts, ignition parts, lighting products, radiators, starters, spark plugs and wires, steering and alignment parts, transmissions, water pumps, and windshield wiper blades; and accessories, such as air fresheners, automotive paints, anti-theft devices, emergency road kits, floor mats, ice scrapers, mirrors, seat and steering wheel covers, and vent shades.
It’s nothing personal against AAP here. Heck, I’m a card carrying member of their loyalty program and often shop for car parts there. But analysts have been increasing bearish on shares of Advance Auto. Over the last week, eight analysts have dropped their estimates for the current quarter while ten have done so for the current year. This has cut our Zacks Consensus Estimate for the current quarter from $1.97 to $1.81 and sank the current year number from $7.91 to $7.44. The revisions came on the heels of another disappointing quarter where the auto parts retailer missed earnings by 4 cents, coming in at $1.71 versus estimates calling for $1.81.
More Stocks to Sell. Now.
Beyond our Bear Stock of the Day, today’s list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.