Wednesday, June 9, 2010

20 Blue Chip Stocks to Sell Now

In the current stock market, investors know that volatility can creep up on them in a hurry and their money can disappear overnight in shaky investments while they're not looking. It's important to remember that buying the best stocks is only part of the battle -- and avoiding poor investments is just as important to your retirement funds as seeking out that big profit maker. That true for all investment strategies, from the most conservative to the most aggressive.

To help you get out of the worst stocks, I've compiled a list of the 20 worst blue chips on Wall Street right now. Each one of these companies has a market cap of more than $10 billion and is widely held, but my fundamental and quantitative analysis proves that these stocks are on the decline.

Fundamentals are key to a good investing strategy because they tell you in black and white if a stock is growing its sales and earnings or if it is succeeding simply by cutting costs -- or worse, watching its revenues slowly slide backwards. Quantitative measures -- or "quant" -- are just as important, since this data indicates buying pressure. After all, the stock market sets price based on supply and demand. If there is no demand and there are no buyers for a given equity, your money is better off elsewhere. When nobody is buying, it's a sure sign that you should be selling.

Here's my list of the 20 worst blue chip stocks to sell right now, accompanied by my grade for each company's fundamental statistics and quant ranking:

SymbolCompany NameIndustryMarket Cap (B)Quant GradeFund. GradeTotal Grade
BBVABanco Bilbao Vizcaya ArgentariaCommercial Banks$33.6FCF
SCHWCharles Schwab Corp.Capital Markets$19.5FDF
CHUChina UnicomTelecommunications$27.3FCF
CSCredit Suisse GroupCapital Markets$42.2FCF
EENI S.p.A.Oil Gas & Fuels$64.3FCF
EXCExelon Corp.Electric Utilities$24.9FCF
FTEFrance TelecomTelecommunications$48.9FCF
GENZGenzyme Corp.Biotechnology$12.7FDF
INGING GroepFinancial Services$28.1FCF
MTUMitsubishi UFJ Financial GroupCommercial Banks$66.4FCF
MONMonsanto Co.Chemicals$26.7FDF
NOKNokia Corp.Communications Equipment$35.5FCF
NTRSNorthern Trust Corp.Capital Markets$11.9FCF
NUENucor Corp.Metals & Mining$12.9FCF
PBRPetrobras Petroleo BrasileiroOil Gas & Consumable Fuels$158.2FDF
PTRPetroChina Co. Ltd.Oil Gas & Fuels$194.6FCF
REPRepsol YPFOil Gas & Fuels$23.3FCF
TITelecom ItaliaTelecommunications$21.3FCF
TOTTotal S.A.Oil Gas & Fuels$101.1FCF
RIGTransocean Ltd.Energy Equipment$16.1FCF

You'll notice that a number of the picks on this list are foreign stocks and ADRs. There's no doubt that the chaos in Europe right now is weighing on the global markets. But as I pointed out in a recent article about euro zone stocks to buy at the bottom, there are still opportunities for investors who want to get into good European equities at a good price. Keep in mind that there is always opportunity even in a bleakest markets. But as you can see, there's no doubt that a number of European stocks are in trouble right now. That's why companies likeTelecom Italia (TI), France energy stock Total (TOT) and Netherlands based ING Groep (ING) are on my list of blue chip stocks to sell.

Also worth noting is that uncertainty over the financial reform bill in Congress appears to be holding back the financial sector. From Credit Suisse (CS) to Northern Trust (NTRS) to Charles Schwab (SCHW), financial blue chips stand out on this list of stocks to sell.



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