We always tell you about the good picks on the market, but this time around we are going to do the opposite and tell a couple stocks to avoid. Knowing the bad stocks is just as important and knowing the good ones. Read up on the warning signs these stocks present and use the information for others too. Here are some details on two specific stocks from Vatalyst.
Chesapeake Energy Corp (CHK]]- CHK is a company with a market capitalization of $13.69B. At time of writing this, they were trading at about $21.41, at the lower end of their 52-week range. Their price per earnings is $10.77, beta is fairly stable at 1.07 relative to the overall market, and their earnings per share is $1.99. Their yield is 0.35 or 1.60%. As recently as Jan 13, 2011, analyst Phil Weiss of Argus Research repeated his sell rating on CHK, cutting his 2011 rating to $2.81/share from $2.88/share, acknowledging that natural gas prices were eating away at CHK’s profits. CHK was also cited in the most recent Bollinger Report dated 1/16/12 as a Sell. We’d rather not buck the analysts on this one.
GMX Resources, Inc (GMXR) - GMXR is an energy and gas company with oil shale operations in ND and MO and natural gas operations in TX with a market capitalization of $68.55M and a yield of 2.31. On December 9th, 2011, GMXR declared a cash dividend of $.578125 per share for holders of record on their 9.25% Series B Cumulative Preferred Stock for period ending Dec 30, 2011. This company, while a dividend payer, is highly leveraged with an operating income of only $1.9 million as of the end of 3Q of 2011 with their oil operation not seeing much of a profit at all.
Use the warning signs in these stocks to determine other troublesome stocks out there. Playing the stock market takes a lot of skill and due diligence, so use these stocks as a learning mechanism. It could pay off later!
Quotes taken from report by Vatalyst, Read the entire article here.
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