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 Mercer International Inc. (MERC), 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 MERC.
A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimates moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from 78 cents a share a month ago to its current level of 67 cents.
Also, for the current quarter, Mercer International has seen 1 downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to 13 cents a share from 15 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 11.7% 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 paper and related products sector, you may instead consider some better-ranked stocks including Resolute Forest Products Inc. (RFP), Stora Enso Oyj (SEOAY) and UPM-Kymmene Oyj (UPMKY). All these stocks hold a Zacks Rank #1 (Buy) and may be better selections at this time.
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MERCER INTERNATIONAL INC (MERC): Free Stock Analysis Report
RESOLUTE FOREST PRODUCTS INC (RFP): Free Stock Analysis Report
STORA ENSO OYJ ADS (SEOAY): Free Stock Analysis Report
UPM KYMNENE CP ADS (UPMKY): Free Stock Analysis Report
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