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Three Stocks That Are Good 'Short' Candidates

MBIA, Eastman Kodak and Energy Conversion Devices receive unfavorable ratings from analysts. Is it time to short these names?
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BOSTON (TheStreet) -- The stock-market correction is spreading the pain to almost all industries. One way to make money is by shorting stocks, or betting on their declines.

Here are three companies that receive poor ratings from research analysts. Investors who expect a further drop in share prices and are interested in short sales should investigate these candidates.

MBIA

(MBI) - Get Report

sells financial-guarantee insurance and investment-management services. The company provides guarantees for municipal debt, an asset class experiencing record volatility. Its stock has a beta, a measure of market correlation, of 2.5.

Quarter

: MBIA swung to a first-quarter loss of $1.9 billion, or $7.22 a share, as revenue turned negative. MBIA holds $3.8 billion of cash and cash equivalents, a 29% decrease from a year earlier. Its debt-to-equity ratio of 14 indicates excessive leverage.

Stock

: MBIA has inched up 3% during the past year, underperforming U.S. stock benchmarks. It trades at a price-to-projected-earnings ratio of 5.3, a 51% discount to the industry average. It's also cheap based on book value, but costly based on cash flow.

Consensus

: Of analysts covering MBIA, none advise purchasing its shares, two recommend holding and one says to sell them.

Deutsche Bank

(DB) - Get Report

offers a price target of $8, leaving a potential return of 20%. But

FBR

(FBCM)

thinks the stock could fall 40% to $4.

Eastman Kodak

(EK)

sells imaging-technology products to photographic, graphic communications and health-care companies. Since 2007, its revenue has decreased 10% annually, on average. During the same span, its stock tumbled 41% a year, on average.

Quarter

: Eastman Kodak swung to a first-quarter profit of $119 million, or 40 cents, from a loss of $353 million, or $1.34, a year earlier. Revenue grew 31%. The operating margin turned positive. Eastman Kodak has $1.5 billion of cash and $1.3 billion of debt.

Stock

: Eastman Kodak has doubled during the past 12 months, outperforming indices by a wide margin. It sells for a price-to-earnings ratio of 8.9 and a price-to-sales ratio of 0.2, 59% and 85% discounts to peer averages. It's fairly priced based on cash flow.

Consensus

: Of researchers following Eastman Kodak, none rate its stock "buy," three rate it "hold" and three rate it "sell."

TST Recommends

Citigroup

(C) - Get Report

, Deutsche Bank and

Cross Research

offer a price target of $5, implying that the stock is overvalued by 4%.

Energy Conversion Devices

(ENER)

designs and sells thin-film solar panels. During the past three years, it has increased revenue 28% annually, on average. However, its stock has plummeted 46% a year over the same span. The shares are down 50% in 2010.

Quarter

: Energy Conversion swung to a fiscal third-quarter loss of $385 million, or $9.10, from a profit of $1.3 million, or 3 cents, a year earlier. Revenue rose 9.7%. The operating margin turned negative. The company has a debt-to-equity ratio of 1.

Stock

: Energy Conversion has plummeted 70% during the past year, trailing U.S. indices. It trades at a price-to-book ratio of 0.8 and a price-to-sales ratio of 1.1, 74% and 44% discounts to peer averages. It has posted four consecutive quarterly losses.

Consensus

: Of analysts covering Energy Conversion Devices, none recommend purchasing its shares, 15 advocate holding and five suggest selling them.

JPMorgan

(JPM) - Get Report

and

Morgan Stanley

(MS) - Get Report

value the stock at $5, 5% below its current price.

-- Reported by Jake Lynch in Boston.

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