The market is full of risks. Stocks are near all-time highs, coronavirus case counts are rising, and a fiscal stimulus in 2020 seems unlikely.
Therefore, investors need to be more careful than usual. The POWR Ratings is one tool to help you pick the best stocks and avoid the worst ones. This exclusive rating system is designed to identify stocks that are worthy of investor attention, for both good and bad reasons.
Below, we take a look at four POWR Ratings downgrades investors should consider removing from their portfolios or shorting with put options: The E.W. Scripps Company (SSP), Huron Consulting Group (HURN), Designer Brands (DBI), and Aptinyx (APTX).
The E.W. Scripps Company (SSP)
Investing in media companies is certainly intriguing yet it is abundantly clear that traditional television networks are losing market share to video games, the internet, and streaming services. SSP has interests in such TV networks along with newspapers, both of which on the downswing.
SSP has “F” grades in the Industry Rank, Buy & Hold Grade, and Trade Grade POWR Components. The stock is ranked 7th of 9 in the Entertainment – Broadcasters category. SSP has a year-to-date price return of -19%. The stock has a three-year price return of -10.90%.
Though SSP bounced from $9 to $12.48 across the past couple of weeks, the stock probably won’t test its pre-COVID trading range of $14 to $16 any time soon. The moral of this story is “out with the old and in with the new”, meaning there are better stocks to invest in than SSP.
Huron Consulting Group (HURN)
HURN owns Huron Consulting Services, a group that provides operational and financial consulting services. These services certainly have the potential to prove lucrative in a thriving economy yet we are currently mired in a deep economic trough.
Take a look at HURN’s POWR Ratings and you will find the stock has “F” grades in the Buy & Hold Grade and Trade Grade components along with “D” grades in the Peer Grade and Industry Rank components.
HURN is ranked fourth of six stocks in the Outsourcing- Management Services segment. HURN has a year-to-date price return of -36.99% along with a three-month price return of -9.62% and a one-year price return of -34.48%.
Designer Brands (DBI)
This has been a bad year for retail stocks as evidenced by DBI’s fall from $18 to $6. DBI’s footwear, socks, handbags, and other sundries have not sold well as a result of the pandemic. DBI has “F” grades in the Buy & Hold Grade and Trade Grade POWR Rating components along with an industry rank of 48 out of 65 publicly traded companies in the Fashion & Luxury space.
DBI has a year-to-date price return of -56%. The stock has a three-year price return of -60.99%. The analysts have clearly soured on DBI, setting an average price target of $6.33, meaning it will likely drop by another 8%.
There is no reason to consider investing in DBI until the company successfully adds an athletic product category to its offerings.
This biopharmaceutical company discovers, develops, and commercializes synthetic molecules to treat disorders that impact the nervous system and brain. APTX products are currently in the clinical stage of development. APTX has “F” grades in the Buy & Hold Grade and Trade Grade POWR Rating components.
The stock is ranked in the bottom half of those in the Medical – Pharmaceuticals category. APTX had a ’19 price return of -79.32%. The stock has a three-month price return of -17.10%.
APTX executives recently stated the company will sell more than 10 million shares in a secondary stock offering, diluting the existing shares all the more. Stay away from this stock until positive news emerges about its treatment candidates.
Want More Great Investing Ideas?
9 “MUST OWN” Growth Stocks for 2021
Is the Bull Market Back on Track?
5 WINNING Stocks Chart Patterns
SSP shares were trading at $11.87 per share on Friday morning, down $0.22 (-1.82%). Year-to-date, SSP has declined -23.15%, versus a 12.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More…