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 Forest Oil Corporation (FST), 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 #5 (Strong Sell) further confirms weakness in FST.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen two estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus loss estimate to widen, going from a loss of 17 cents a share a month ago to its current loss level of 27 cents.
Also, for the current quarter, Forest Oil has seen four downward estimate revisions versus no revision in the opposite direction, dragging the consensus loss estimate to widen to a loss of 6 cents a share from a loss of 4 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.8% 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 Oil – Exploration & production industry, you may instead consider some better-ranked stocks including Cobalt International Energy, Inc. (CIE), Black Ridge Oil & Gas, Inc (ANFC) and Halcon Resources Corp. (HK). While Cobalt International Energy holds a Zacks Rank #1 (Strong Buy), Black Ridge and Halcon Resources carry a Zacks Rank #2 (Buy).
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