Editor's Pick: Originally Published Tuesday, Dec. 22.
The year is quickly coming to a close, which means it's time to clear your investment portfolio of underperforming stocks.
That means selling these eight technology stocks now. Sounds counterintuitive given that that the tech sector has widely outperformed the S&P500 this year, up 9.5% vs. 0.15%, respectively, but the large-cap stocks below are all rated "sell" by TheStreet Ratings, TheStreet's proprietary ratings tool. So if you're holding onto these stocks, get out of them now.
TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equity market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Here's the list of tech stocks to sell. When you're done check out the tech stocks to buy for 2016.
Industry: Technology/Application Software
2015 return: -0.84%
, together with its subsidiaries, designs and develops software and related technologies for camera-based advanced driver assistance systems primarily in Israel. It operates through two segments, Original Equipment Manufacturing and After Market.
TheStreet Said: Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate MOBILEYE NV as a Sell with a ratings score of D+. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and premium valuation.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MBLY has underperformed the S&P 500 Index, declining 6.13% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- When compared to other companies in the Software industry and the overall market, MOBILEYE NV's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for MOBILEYE NV is currently very high, coming in at 75.49%. Regardless of MBLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MBLY's net profit margin of 34.27% significantly outperformed against the industry.
- Net operating cash flow has significantly increased by 141.39% to $26.22 million when compared to the same quarter last year. In addition, MOBILEYE NV has also vastly surpassed the industry average cash flow growth rate of -8.51%.
- You can view the full analysis from the report here: MBLY