Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.
One such stock that you may want to consider dropping is FX Energy Inc. (FXEN), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current year. A Zacks Rank #5 (Strong Sell) further confirms weakness in FXEN.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimate moving down in the past 30 days, compared with no upward revision. The consensus estimate has also trended lower, going from earnings of 6 cents a share a month ago to its current level of a loss of 10 cents.
For the current quarter, FX Energy has not seen any estimate revision, and the consensus estimate has been flat at a loss of 2 cents a share over the past 30 days.
The stock has also seen some pretty dismal trading lately, as the share price has dropped 11.3% in the past month.
So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.
If you are still interested in the Oils/Energy sector, you may instead consider some better-ranked stocks including, Vermilion Energy Inc. (VET), Valero Energy Corporation (VLO) and Clayton Williams Energy, Inc. (CWEI). While Vermilion and Valero carry a Zacks Rank #1 (Strong Buy), Clayton Williams holds a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.
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