Update: Are You Taking Profits in These 5 Stocks?

Correction: The stocks in this post were mentioned by David Sterman.

Commentator David Sterman argues that the following 5 stocks should be avoided.  What do you think?

  1. Sprint Nextel (NYSE:S): The company’s market capitalization is $17.5 billion, its price-to-earnings growth ratio is -2, its price-t0-sales is 0.54, and its price-to-book is 1.25.  The company lost $3 billion last year, on revenue of $32 billion.  About the company:  Sprint Nextel Corporation offers a range of wireless and wireline communications services to consumer, business, and government customers.  The Company develops, engineers, and deploys various technologies, including two wireless networks offering mobile data services, instant national and international push-to-talk capabilities, and a global Tier 1 Internet backbone. Competitors to Watch: AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), Clearwire Corporation (NASDAQ:CLWR), Deutsche Telekom AG (DTEGY), MetroPCS Communications, Inc. (NYSE:PCS), Leap Wireless Intl., Inc. (NASDAQ:LEAP), NTELOS Holdings Corp. (NASDAQ:NTLS), United States Cellular Corp. (NYSE:USM), Telephone & Data Systems, Inc. (NYSE:TDS), and CenturyLink, Inc. (NYSE:CTL).
  2. AMR (NYSE:AMR): The company’s market capitalization is $2.12 billion, its price-to-earnings growth ratio is -1.04, and ts price-to-sales ratio is 0.09.  Its price-to-book ratio cannot be calculated because book value per share is -$11.80 (debt, at $12 billion, exceeds its market capitalization by $10 billion).  The company lost $402 million last year on revenue of $22 billion. About the company:  AMR Corporation operates an airline that provides scheduled passenger, freight, and mail service throughout North America, the Caribbean, Latin America, Europe and the Pacific.  The Company also provides connecting service throughout the United States, Canada, and the Caribbean.  In addition, AMR provides aviation services, call center management services, and investment advisory services. Competitors to Watch: Delta (NYSE:DAL), Southwest Airlines Co. (NYSE:LUV), United Continental (NYSE:UAL), JetBlue (NASDAQ:JBLU), US Airways (NYSE:LCC), Alaska Air (NYSE:ALK), and AirTran Holdings (NYSE:AAI)
  3. Netflix (NASDAQ:NFLX): The company’s market capitalization is $13.89 billion, its price-to-earnings growth ratio is 1.98, its price-to-sales ratio is 5.8, and its price-to-book ratio is 50.24.  The company earned $188 million on revenue of $2.39 billion last year.  About the company:  Netflix, Inc. is an online movie rental service.  The Company ships DVDs with no due dates or late fees, directly to the subscriber’s address.  Netflix also provides background information on DVD releases, including critic reviews, member reviews and ratings, and personalized movie recommendations. Competitors to Watch: Amazon.com Inc. (NASDAQ:AMZN), Dish Networks (NASDAQ:DISH), Best Buy (NYSE:BBY), Comcast (NASDAQ:CMCSA), AOL (NYSE:AOL), Time Warner (NYSE:TWX), Time Warner Cable (NYSE:TWC), DirecTV (NASDAQ:DTV), TiVo (NASDAQ:TIVO), Echostar (NASDAQ:SATS), Coinstar, Inc. (NASDAQ:CSTR), Apple Inc. (NASDAQ:AAPL) and IMAX (NASDAQ:IMAX).
  4. LinkedIn (NYSE:LNKD): The company’s market capitalization is $8.35 billion, its trailing price-to-earnings ratio is 1,318.21, its price-to-sales ratio is 27.92, and its price to book ratio is 123.92.  It earned $3.43 per share last year on reveneues of $292.32 million.  About the company:  LinkedIn Corporation operates a social networking website used for professional networking.  The Company’s website allows members to post a profile of their professional expertise and accomplishments.  LinkedIn allows members to be introduced to potential clients, service providers, and subject experts.
  5. Rite-Aid (NYSE:RAD): The company’s market capitalization is $943.65 million, its earnings are negative so it has neither a trailing nor a forward price-to-earnings ratio, its price-to-earnings growth ratio is -0.25, its price to sales ratio is 0.04, and its price-to-book ratio is not available because total debt exceeds its market capitalization.  The company lost $564.87 million on revenues of $25.21 billion last year.  About the company:  Rite Aid Corporation operates a retail drugstore chain in various states and the District of Columbia.  The Company’s stores sell prescription drugs, as well as other products such as nonprescription medications, health and beauty aids, and cosmetics.

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