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 Medallion Financial Corp. (TAXI), 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 TAXI.
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 $1.13 a share a month ago to its current level of 97 cents.
Also, for the current quarter, Medallion Financial has seen 1 downward estimate revision versus no revision in the opposite direction, dragging the consensus estimate down to 23 cents a share from 28 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 11.56% 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 Financial sector, you may instead consider some better-ranked stocks including Fifth Street Senior Floating Rate Corp. (FSFR), Saratoga Investment Corp. (SAR) and CM Finance Inc. (CMFN). While Fifth Street Senior Floating Rate and Saratoga Investment carry a Zacks Rank #1 (Strong Buy), CM Finance carries a Zacks Rank #2 (Buy) and may be better selections at this time.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
MEDALLION FINANCIAL CP (TAXI): Free Stock Analysis Report
FIFTH STREET SENIOR FLOATING RAT (FSFR): Free Stock Analysis Report
SARATOGA INVESTMENT CORP NEW (SAR): Free Stock Analysis Report
CM FINANCE INC (CMFN): Free Stock Analysis Report
Zacks Investment Research
- Personal Investing Ideas & Strategies
- Investment & Company Information