These factors are historically proven to point the way toward stocks that outperform.<\/p>\n
And while these alpha factors historically show which stocks have the best potential for outsized returns, there’s more than one way to utilize the rankings.<\/p>\n
They also shine the spotlight on which stocks to avoid… or even bet against.<\/p>\n
That’s because the worst ranked stocks have delivered -10.8% in annualized returns since 2010.<\/p>\n
Think about that for a moment… During a period characterized by a massive bull market, the bottom ranked stocks still lost nearly 80% of their value in total.<\/p>\n
That proves companies showing things like poor profitability and quality are the ones to avoid.<\/p>\n
And that brings me back to Wayfair, and why you should avoid the temptation of buying at these levels.<\/p>\n
No Edge Here<\/h2>\n
This isn’t meant to be an attack on Wayfair’s stock. I’m simply highlighting data contained in the company’s financial statements and stock price that make up my ranking system.<\/p>\n
Consider that earnings are expected to be in the red by $4.25 per share, while estimates for 2024 are being revised lower by Wall Street analysts over the past six months.<\/p>\n
That’s dragging down profitability and analyst revision factors in the score. That’s why Wayfair scores a 4 (out of 100) in my model.<\/p>\n
<\/p>\n
Free Trading Resources<\/strong><\/p>\n Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n <\/p>\n Now look at the chart setup, which goes back to June 2021.<\/p>\n <\/p>\n As the stock plunged into 2022, you can see that a low was found back in October around the $29 level.<\/p>\n Ever since then, the stock has been trading sideways, testing that same $29 level multiple times (the dashed trendline).<\/p>\n And while it might be tempting to buy a stock that’s down 89% from the peak and potentially carving out a support level, I’m not dipping my toe in the water until the stock’s rank improves.<\/p>\n There’s also something else I would watch for…<\/p>\n Given the stock’s current score, I would consider adding puts on a breakdown through that $29 support level.<\/p>\n It’s easy to find stocks across the market that are down significantly from their highs.<\/p>\n But before you go off bargain hunting, check if an edge is there.<\/p>\n Best regards,<\/p>\n Clint Brewer<\/p>\n <\/p>\n Are there any stocks you’d like to check for an edge? We’ll be doing a “bargain finds” series, where I’ll run a few stocks through my alpha rank and let you know if it’s an opportunity or not.<\/p>\n![\"Image\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202304\/20230426-JMU-02_wbr622.png\")
<\/p>\nREADER MAILBAG<\/h2>\n<\/div>\n