December 8/12 watch list+ Barron's article entitled Trigger Happy
....Merrill Lynch poll sheds light on the vicious punishment that usually follows earnings disappointments.
Have you ever wondered what prompts Wall Street's big boys to pull their vbillionss out of one stock and put them into another? Well, now you have the answer, or rather, a series of answers, thanks to the latest annual poll of Merrill Lynch's institutional clients. While the average investor might select blue-chip companies that boast familiar products, strong balance sheets and secure dividends, institutions shun such straightforward results.
Amond the 122 outfits that responded to Merrill's poll, the top strategy was buying stocks of companies that had just delivered higher than expected earnings and selling those whose earnings had fallen short. On Wall Street, these occurences are known as "earnings surprises". As the accompanying tabl shows, this strategy layed a role in the stock selections of 54% of the institutions:
WHAT THE PROS WATCH:
54.1% Earnings Surprise
50.8% Return on Equity
48.45% Analysts earnings revisions
48.45% Price-to-cash flow ratio
45.9% Projected five year profit growth
43.4% Debt-to Equity ratio
41.0% Earnings momentum
38.5% Relative Strength
34.4% Price to earnings ratio
33.6% Price to book ratio
33.6% Analysts' opinion changes
31.1% Earnings variability
27.9% Price to sales ratio
December 8: AZO, STBI, BLDG*, TEC,
December 9: TOL*, VTS*, MICA
December 10: ROBN*, SKO, CIEN (ran up before earnings watch this one)
December 11: PBYP, PIR
December 12: OCLI**
*best bet
**pick of the week |
