NEW YORK (TheStreet) -- Investing in stocks is all about risk tolerance.

When a bull market is roaring, volatile stocks have the potential to outperform, providing great returns. But when the market drops, those same stocks could give back the returns they made and then some. An investor who doesn't have the stomach for big swings may not want to choose stocks that have so-called "high beta."

Beta is a popular measure of volatility because it "distills a pretty complicated concept into a single number. If it's above 1, then the stock is 'riskier than the market,' and if it's below 1, then it's 'less risky,'" according to Jonas Elmerraji, a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet.

"Beta is also more talked about in this more risk-aware environment because it's one of the tools that professionals use to measure risk-adjusted returns," Elmerraji wrote in an email. "Instead of just saying, 'I made 20% last year,' risk-adjusted returns help answer whether big returns came from good stock picking, or simply taking more risk and getting lucky. Beta is one of the more popular inputs used to calculate risk-adjusted returns."

Portfolios with stocks that have a high beta may be more appropriate for investors with high-risk appetites or for younger investors who have longer time horizons to ride through several bull and bear markets. A retiree is more likely to want income from his or her portfolio and thus might prefer the steady return afforded by less risky stocks.

Investors "want to align their beta exposure with their own risk tolerance," said Matthew Coffina, editor of the Morningstar StockInvestor newsletter.

Sectors that are more sensitive to the economy or directly to financial markets such as financial services, basic materials, energy and industrials, tend to have higher beta measurements. Health care, utility and consumer defense stocks tend to have lower beta. These stocks "don't go up as much in a bull market, but they also don't tend to fall off in a bear market," Coffina said.

But even if you are a risk taker, there are some stocks you should just avoid altogether. TheStreet chose stocks in the S&P 500 rated sell by its proprietary rating tool, TheStreet Ratings, with a grade of D+ or worse and a beta greater than 1. Five of the 11 stocks are in the energy sector, given the steep decline in oil prices this year.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, 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 revenue, financial strength, and company cash flows -- and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecast 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 are 11 stocks with high volatility to avoid. Be sure to also check out 13 volatile stocks to buy. Note: Year-to-date return percentages are based on Feb. 27, 2015, closing prices.


APA ChartAPA data by YCharts

11. Apache  (APA - Get Report)
Industry: Energy/Oil & Gas Exploration & Production
Market Cap: $25.1 billion
Rating: Sell, D+
Beta: 1.41
YTD Return: 5.1%

Apache, an independent energy company, explores for, develops and produces natural gas, crude oil and natural gas liquids.

According to TheStreet Ratings team, "We rate Apache a sell. 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 deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings team include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared with that of the S&P 500 and the oil, gas & consumable fuels industry. The net income has significantly decreased by 2866.7% when compared with the same quarter one year ago, falling to -$4,814.00 million from $174.00 million.
  • Return on equity has greatly decreased when compared with its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared with other companies in the oil, gas & consumable fuels industry and the overall market, Apache's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $1,933.00 million or 21.96% when compared with the same quarter last year. In conjunction, when comparing current results to the industry average, Apache has marginally lower results.
  • The share price of Apache has not done very well: it is down 20.75% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Apache has experienced a steep decline in earnings per share in the most recent quarter in comparison with its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Apache swung to a loss, reporting -$13.07 versus $5.95 in the prior year. This year, the market expects an improvement in losses          (-$1.36 versus -$13.07).

You can view the full analysis from the report here: APA Ratings Report

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10. WPX Energy  (WPX - Get Report)
Industry: Energy/Oil & Gas & Production
Market Cap: $2.5 billion
Rating: Sell, D+
Beta: 1.41
YTD Return: -7.3%

WPX Energy, an independent natural gas and oil exploration and production company, is engaged in the exploitation and development of unconventional properties in the U.S.

According to TheStreet Ratings team, "We rate WPX Energy a sell. This is driven by multiple 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 with most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings team include:

  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared with other companies in the oil, gas & consumable fuels industry and the overall market, WPX Energy's return on equity significantly trails that of both the industry average and the S&P 500.
  • WPX's stock share price has done very poorly compared with where it was a year ago: Despite any rallies, the net result is that it is down by 30.40%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • WPX Energy reported significant earnings per share improvement in the most recent quarter compared with the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WPX Energy reported poor results of -$5.37 versus -$1.24 in the prior year. This year, the market expects an improvement in earnings (9 cents versus -$5.37).
  • The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that WPX's debt-to-equity ratio is low, the quick ratio, which is currently 0.58, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for WPX Energy is rather high; currently it is at 54.79%. It has increased significantly from the same period last year. Along with this, the net profit margin of 7.80% is above that of the industry average.
  • You can view the full analysis from the report here  : WPX Ratings Report

AVP Chart AVP data by YCharts

9. Avon Products (AVP - Get Report)
Industry: Consumer Non-discretionary/Personal Products
Market Cap: $3.8 billion
Rating: Sell, D
Beta: 1.44
YTD Return: -9.4%

Avon Products manufactures and markets beauty and related products.

According to TheStreet Ratings team, "We rate Avon a sell. 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 deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings team include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the personal products industry. The net income has significantly decreased by 378.6% when compared to the same quarter one year ago, falling from -$69.10 million to -$330.70 million.
  • The debt-to-equity ratio is very high at 8.98 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, AVP maintains a poor quick ratio of 0.74, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared with other companies in the personal products industry and the overall market, Avon's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $234.00 million or 47.21% when compared to the same quarter last year. In addition, when comparing with the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.19%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 368.75% compared with the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
NE Chart NE data by YCharts

8. Noble (NE - Get Report)
Industry: Energy/Oil & Gas Drilling
Market Cap: $4.8 billion
Rating: Sell, D+
Beta: 1.55
YTD Return: 0.42%

Noble operates as an offshore drilling contractor for the oil and gas industry.

According to TheStreet Ratings team, "We rate  Noble a sell. This is driven by multiple 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 with most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings team include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared with that of the S&P 500 and the energy equipment & services industry. The net income has significantly decreased by 450.2% when compared to the same quarter one year ago, falling from $174.06 million to -$609.57 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared with other companies in the energy equipment & services industry and the overall market, Noble return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $389.91 million or 27.88% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.01%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 450.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Noble has experienced a steep decline in earnings per share in the most recent quarter in comparison with its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Noble swung to a loss, reporting 67 cents versus $1.98 in the prior year. This year, the market expects an improvement in earnings ($2.16 versus -67 cents).

 

QEP Chart QEP data by YCharts

7. QEP Resources (QEP - Get Report)
Industry: Energy/Oil & Gas Exploration & Production
Market Cap: $4 billion
Rating: Sell, D
Beta: 1.79
YTD Return: 6.2%

QEP Resources, through its subsidiaries, operates as an independent oil and natural gas exploration and production company.

According to TheStreet Ratings team, "We rate QEP Resources a sell. This is driven by some concerns, 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 disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings team include:

  • Return on equity has greatly decreased when compared with its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared with other companies in the oil, gas & consumable fuels industry and the overall market, QEP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 30.76%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 457.44% compared with the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • QEP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, QEP swung to a loss, reporting -$2.29 versus 29 cents in the prior year. This year, the market expects an improvement in earnings (-$0.47 versus -$2.29).
  • 44.45% is the gross profit margin for QEP which we consider to be strong. Regardless of QEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, QEP's net profit margin of 83.27% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 51.69% to $322.80 million when compared to the same quarter last year. In addition, QEP RESOURCES INC has also vastly surpassed the industry average cash flow growth rate of -13.29%.
Must Read: 11 Stocks Buffett, Paulson and Other Billionaire Investors Abandoned

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6. J.C. Penney (JCP - Get Report)
Industry: Consumer Goods & Services/Department Stores
Market Cap: $2.5 billion
Rating: Sell, D
Beta: 1.86
YTD Return: 31.2%

J.C. Penney, through its subsidiary, J. C. Penney Corporation Inc., sells merchandise through department stores in the United States.

According to TheStreet Ratings team, "We rate J.C. Penney a sell. This is driven by a few notable 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. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures."

Highlights from the analysis by TheStreet Ratings team include:

  • The debt-to-equity ratio is very high at 2.23 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Multiline Retail industry and the overall market, J.C. Penney's return on equity significantly trails that of both the industry average and the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 0.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • J.C. Penney reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, J.C. Penney reported poor results of -$6.07 versus -$4.49 in the prior year. This year, the market expects an improvement in earnings (-$2.55 versus -$6.07).
  • 36.65% is the gross profit margin for J.C. Penney which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -6.80% trails the industry average.


BTU ChartBTU data by YCharts

5. Peabody Energy (BTU - Get Report)
Industry: Energy/Coal & Consumable Fuels
Market Cap: $2.1 billion
Rating: Sell, D
Beta: 1.88
YTD Return: 2.1%

Peabody Energy is engaged in the mining of coal. 

According to TheStreet Ratings team, "We rate Peabody Energy a sell. 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 high debt management risk, disappointing return on equity, poor profit margins, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings team include:

  • The debt-to-equity ratio is very high at 2.20 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.47, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the oil, gas & consumable fuels industry and the overall market, Peabody Energy's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for Peabody Energy is rather low; currently it is at 16.82%. Regardless of BTU's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, BTU's net profit margin of -30.54% significantly underperformed when compared to the industry average.
  • Looking at the price performance of BTU's shares over the past 12 months, there is not much good news to report: the stock is down 54.04%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Peabody Energy's earnings per share declined by 17.8% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Peabody Energy reported poor results of -$2.83 versus -$1.12 in the prior year. This year, the market expects an improvement in earnings (-$1.09 versus -$2.83).

 

GNW Chart GNW data by YCharts

4. Genworth Financial (GNW - Get Report)
Industry: Financial Services/Multi-line Insurance
Market Cap: $4 billion
Rating: Sell, D+
Beta: 2.01
YTD Return: -8.8%

Genworth Financial, a financial services company, provides insurance, investment and financial solutions in the U.S. and internationally. 

According to TheStreet Ratings team, "We rate Genworth Financial a sell. This is driven by multiple 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 deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings team include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 465.4% when compared to the same quarter one year ago, falling from $208.00 million to -$760.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Insurance industry and the overall market, Genworth Financial's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 46.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 464.28% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Genworth Financial has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Genworth Financial swung to a loss, reporting -$2.51 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus -$2.51).
  • Despite currently having a low debt-to-equity ratio of 0.46, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.

FCX Chart FCX data by YCharts

3. Freeport-McMoran  (FCX - Get Report)
Industry: Materials/Diversified Metals & Mining
Market Cap: $21.9 billion
Rating: Sell, D+
Beta: 2.15
YTD Return: -7.4%

Freeport-McMoRan, a natural resource company, is engaged in the acquisition of mineral assets and oil and natural gas resources. The company primarily explores for copper, gold, molybdenum, cobalt, silver and other metals, as well as oil and gas.

According to TheStreet Ratings team, "We rate Freeport-McMoRan a sell. 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 deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings team include

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 503.4% when compared to the same quarter one year ago, falling from $707.00 million to -$2,852.00 million.
  • The debt-to-equity ratio of 1.04 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, FCX has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, Freeport-McMoRan underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Net operating cash flow has significantly decreased to $1,118.00 million or 53.33% when compared to the same quarter last year. Despite a decrease in cash flow of 53.33%, Freeport-McMoRan is in line with the industry average cash flow growth rate of -56.70%.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.36%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 504.41% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

 

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2. Advanced Micro Devices (AMD - Get Report)
Industry: Technology/Semiconductors
Market Cap: $2.4 billion
Rating: Sell, D
Beta: 2.19
YTD Return: 16.5%

Advanced Micro Devices operates as a semiconductor company worldwide. It operates in two segments, computing solutions and graphics and visual solutions.

According to TheStreet Ratings team, "We rate Advanced Micro Devices a sell. This is driven by a number of negative factors, 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 deteriorating net income, disappointing return on equity, poor profit margins, generally high debt management risk and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings team include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 509.0% when compared to the same quarter one year ago, falling from $89.00 million to -$364.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, Advanced Micro Devices' return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for Advanced Micro Devices is currently lower than what is desirable, coming in at 32.61%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -29.37% is significantly below that of the industry average.
  • The debt-to-equity ratio is very high at 11.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AMD's quick ratio is somewhat strong at 1.29, demonstrating the ability to handle short-term liquidity needs.
  • The share price of Advanced Micro Devices has not done very well: it is down 17.75% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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1. Cliffs Natural Resources (CLF - Get Report)
Industry: Materials/Steel
Market Cap: $1.3 billion
Rating: Sell, D-
Beta: 2.21
YTD Return: -3.9%

Cliffs Natural Resources, a mining and natural resources company, produces iron ore and metallurgical coal.

According to TheStreet Ratings team, "We rate Cliffs Natural Resources a sell. This is driven by multiple 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 deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings team include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 2986.8% when compared to the same quarter one year ago, falling from $43.30 million to -$1,250.00 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 68.54%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 4225.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has decreased to $254.90 million or 44.58% when compared to the same quarter last year. Despite a decrease in cash flow Cliffs Natural Resources is still fairing well by exceeding its industry average cash flow growth rate of -56.70%.
  • Cliffs Natural Resources has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Cliffs Natural Resources swung to a loss, reporting -$47.29 versus $2.33 in the prior year. This year, the market expects an improvement in earnings (11 cents versus -$47.29).
  • CLF, with its decline in revenue, underperformed when compared the industry average of 2.4%. Since the same quarter one year prior, revenues fell by 15.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.