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Zacks Issues Recommendations on 4 Stocks: IRF, SCHL, GTW and TSN
September 03, 2002 06:00:00 AM ET

CHICAGO, Sept. 3 /PRNewswire/ -- Zacks.com releases details on a group of stocks that are part of their exclusive list of Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell). These stocks have been proven to under-perform the S&P 500 by 89.8% since its inception in 1980. While the rest of Wall Street continued to tout stocks during the market declines of the last few years, we were telling our customers which stocks to sell in order to save themselves the misery of unrelenting losses. Among the #5 ranked stocks today we highlight the following companies: International Rectifier Corporation's IRF and Scholastic Corporation SCHL. Further they announced #4 Rankings (Sell) on two other widely held stocks: Gateway, Inc. GTW and Tyson Foods, Inc. TSN. To see the full Zacks #5 Ranked list of Stocks to Sell Now then visit: http://stockstosellpr.zacks.com .

(Photo: http://www.newscom.com/cgi-bin/prnh/20010924/CGM015LOGO )

Here is a synopsis of why these stocks have a Zacks Rank of 5 (Strong Sell) and should most likely be sold or avoided for the next 1 to 3 months. Note that a #5/Strong Sell rating is applied to 5% of all the stocks we rank:

International Rectifier Corporation IRF is a specialty semiconductor firm that seemed immune to the ills of the industry, but even they too have recently succumbed to the weakness in technology spending. As such, earnings estimates continue to move lower, after they reduced their 2003 revenue guidance. The company operates within an industry that got pounded from the economic downturn, and its recovery is now expected to come slower than previously thought. Over the past three months, IRF has watched its earnings expectations erode by 29 cents for the current year. However, the company remains quite active and recently launched new 600V and 500V power MOSFETs for use in telecom and datacom systems. So, once the recovery reaches IRF's industry, the company should be set for a good rebound. But, it doesn't look like that's going to happen in the near-term and so your money is best off elsewhere.

Scholastic Corporation SCHL is a leading children's publishing and media company. The company recently settled a stock appreciation rights lawsuit that will cost $1.2 million, or $800,000 after tax, which will reduce the company's 2002 earnings by two cents. But even before that analysts had trimmed expectations on the year by 21 cents. SCHL remains the leader in children's publishing and, in the long run, this reduction in earnings probably won't heavily impact the company. But, by lowering their estimates, analysts have taken a more cautious stance on their near term prospects. So if you like their long term prospects, then make sure to wait for them to meet/exceed current estimates and analysts follow suit with raised estimates for the future. This will be the key fundamental sign that the stock is ready to ascend.

Below is a synopsis of why these two stocks have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next 1 to 3 months. Note that a #4/Sell rating is applied to 15% of all the stocks we rank:

Gateway, Inc. GTW is one of the country's largest direct marketers of personal computers. In its second quarter, the company reported a net loss of 19 cents a share, which missed the consensus estimate and deepened its loss from the previous year. In addition, sales fell by more than -30%. It's no surprise why GTW has been having problems, since personal computers sales have dropped substantially in the economic downturn. Analysts now expect steeper losses this year and next. Estimates have regressed by nine cents over the past three months for each of those years. Nevertheless, GTW still sold more units in the quarter than it did in the previous one, and continues to release new and exciting products like its Profile 4 computer. GTW should recover in better economic circumstances, but investors may want to look for other opportunities outside of the sector in the interim.

Tyson Foods, Inc. TSN is one of the world's leading meat packagers. A surplus of meat was a major factor in TSN's recent decision to restructure and reduce its live swine operation. The price of pork has been dropping and the division has been operating at a loss. The move will reduce fourth-quarter pretax earnings by $20 million to $30 million. Furthermore, in the company's most recent quarterly report, TSN warned that fourth-quarter and full-year results would be lower than expected due, in part, to the meat glut. Analysts have been backing away from the company over the past month as the imbalance between meat and pork isn't expected to correct itself until sometime in 2003. Nevertheless, the company is the leader in its industry and will most likely remain that way through good times and bad. However, this moment may not be the best time to add/hold a position of TSN in your portfolio.

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