This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 S&P 500 Stocks to Avoid Into 2012

Stocks in this article: TXT DD LMT NSC ARG FLR

MINNEAPOLIS ( Stockpickr) -- We are seeing stocks move smartly higher this week thanks to an easing of fears regarding Greece and the eurozone. While default remains on the table, an unexpected and disorganized collapse is less likely given the support of France and Germany. Thursday marked the fourth straight day of gains, and stocks are on the rise again today.

The market hates surprises. So even though the situation in the eurozone remains more or less the same, investors cheered the semblance of a plan to deal with things in a stable manner. The action this week puts economic concerns on the back burner. Nothing in the data released this week suggests that we are out of the woods with respect to a double-dip recession.

For anyone interested in fundamentals, there are cracks beginning to appear in the form of reduced earnings estimates for the S&P 500. On Monday, Barclays and Wells Fargo cut their forecasts for the index, citing economic uncertainty; a Wells Fargo analyst reduced her year-end price target on the index by 10% and aggregate earnings for 2012 by 5%.

Related: 5 Loser Stocks Poised for Rebounds

The winds of slower growth have been blowing for some time. It is only now that we face a reckoning with respect to the impact on earnings performance.

Thus far, earnings have been on a roll. What is unclear is how things will transpire in 2012. One of the reasons stocks have declined since the middle of July is an expectation of smaller profits. Wall Street analysts, always attempting to endear themselves to management, have been reluctant to reduce company estimates on a micro level.

The reduction in expectations for the S&P 500 index is only the beginning. The next phase will be companies reducing guidance and expectations for the remainder of this year and next. On Wednesday, Textron (TXT) lowered its profit guidance for 2011 earnings. Expect to see more of these announcements as the third quarter comes to a close at the end of September.

The Wells Fargo analyst is suggesting that investors be underweight industrial, energy and material companies. Here are five S&P 500 stocks likely to be hit by lowered estimates that investors should sell or avoid.

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs