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 MCG Capital Corporation (MCGC), 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 MCGC.
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 revisions. This trend has caused the consensus estimate to trend lower, going from 49 cents a share a month ago to its current level of 40 cents.
Also, for the current quarter, MCG Capital has seen 1 downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to 9 cents a share from 13 cents over the past 30 days.
The stock also has seen some pretty dismal trading lately, as the share price has dropped 14.5% 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 services sector, you may instead consider some better-ranked stocks including Safeguard Scientifics, Inc. (SFE), with a Zacks Rank #1 (Strong Buy), Apollo Investment Corporation (AINV) and Fidus Investment Corporation (FDUS), both holding a Zacks Rank #2 (Buy).
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 >>
MCG CAPITAL CP (MCGC): Free Stock Analysis Report
SAFEGUARD SCIENTIFICS INC (SFE): Free Stock Analysis Report
APOLLO INVESTMENT CP (AINV): Free Stock Analysis Report
FIDUS INVESTMENT CORP (FDUS): Free Stock Analysis Report
Zacks Investment Research