For Immediate Release
Chicago, IL – September 9, 2020 – Stocks in this week’s article are Illumina Inc. ILMN, PFSweb, Inc. PFSW, Cameco Corp. CCJ and BioMarin Pharmaceutical Inc. BMRN.
These 4 Stocks Could Be Toxic for Your Portfolio
Making a proper distinction between fairly priced stocks and overpriced stocks is the key to investing success. However, the correctly priced and the overhyped toxic stocks are mingled in such a way in the marketplace that it is not easy to separate them. Investors who can figure out the overpriced stocks and dump them at the right time are the ones likely to make a profit.
In general, toxic stocks are burdened with huge debt loads and vulnerable to external shocks. Moreover, irrationally higher price of the toxic stocks are short-lived as the inherent value of these stocks is lower than their current price. Quite justifiably, if you own such toxic stocks for an inordinate period of time, you are sure to see huge erosion in your wealth.
Higher price of the toxic stocks can be ascribed to either an irrational exuberance associated with them or some serious fundamental drawbacks associated with them. If you own such stocks for long, you are likely to see a big loss in your wealth.
If you can, however, precisely pinpoint the toxic stocks, you may gain by resorting to an investing strategy called short selling. This strategy allows you to sell a stock first and then buy it when the price falls.
While short selling excels in bear markets, it typically loses money in bull markets.
So, just like identifying stocks with growth potential, spotting toxic stocks and dumping them at the right time is the key to safeguard your portfolio from big losses or make profits by short selling them.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1054841/these-4-stocks-could-be-toxic-for-your-portfolio?art_rec=quote-stock_overview-zacks_news-ID01-txt-1054841
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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