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 Sanchez Energy Corporation (SN), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in SN.
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. This trend has caused the consensus estimate to trend lower, going from $1.17 a share a month ago to its current level of 48 cents.
Also, for the current quarter, Sanchez Energy has seen 1 downward estimate revision versus no revision in the opposite direction, dragging the consensus estimate down to 15 cents a share from 37 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.9% 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 basic materials sector, you may instead consider some better-ranked stocks including Northern Oil and Gas, Inc. (NOG), WPX Energy, Inc. (WPX) and Black Ridge Oil & Gas, Inc (ANFC). While Northern Oil and Gas and WPX Energy hold a Zacks Rank #1 (Strong Buy), Black Ridge Oil & Gas holds a Zacks Rank #2 (Buy).
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