I can hardly believe it, but we’re entering the home stretch of 2016. With the second-quarter earnings season now behind us, we’re now heading into a period of quarter-end window dressing. This is the time of year when portfolio managers rebalance their portfolios, favoring the fundamentally strongest stocks in the process.
But I wouldn’t be surprised to see some bumpiness from time to time, especially as third-quarter earnings season kicks off. There is also a lot of uncertainty as we approach the November Presidential Election. While this will present a good buying opportunity for the savvy stock pickers, this also means that it’s time to watch out for what I like to call "slippery slope" stocks. More on that in a moment.
The best way to prepare for hedge against volatility is by realigning your portfolio for maximum performance. If you want to avoid many of the headaches that come with an uncertain market, start by trimming the dead weight in your portfolio. Ensure smooth and steady returns by sticking with more conservative stocks.
And you can do this by checking your stocks in Portfolio Grader. When you run your holdings through this screening tool, take note of each stock’s Quantitative Grade (the current level of institutional buying pressure) and each stock’s Fundamental Grade (a weighted blend of eight financial metrics). Also check which of your stocks are rated as Conservative, Moderately Aggressive or Aggressive. Shoot to have 60% of your holdings in Conservative stocks, 30% in Moderately Aggressive and 10% in Aggressive.
I can’t stress this last point enough because aggressive stocks are the first one to take a beating in a correction, so you’ll want to limit your exposure to these “spicier” stocks. To get you started, here are 32 moderately aggressive and aggressive-rated stocks you’ll want to steer clear of in the coming months.
|Symbol||Company Name||Quantitative Grade||Fundamental Grade||Total Grade|
|ADS||Alliance Data Systems Corp.||F||C||D|
|APC||Anadarko Petroleum Corp.||F||C||D|
|BMRN||BioMarin Pharmaceutical Inc.||F||D||F|
|CAR||Avis Budget Group Inc.||D||D||D|
|CF||CF Industries Holdings Inc.||F||F||F|
|CS||Credit Suisse Group AG||F||D||F|
|DATA||Tableau Software Inc.||F||D||D|
|JLL||Jones Lang LaSalle Inc.||F||C||D|
|KMI||Kinder Morgan Inc||F||C||D|
|LM||Legg Mason Inc.||F||D||F|
|MPEL||Melco Crown Entertainment Ltd.||D||C||D|
|NMR||Nomura Holdings Inc.||F||D||D|
|ODP||Office Depot Inc.||F||C||F|
|PAG||Penske Automotive Group Inc.||D||C||D|
|PII||Polaris Industries Inc.||F||C||F|
|RBS||Royal Bank of Scotland Group Plc||F||C||F|
|REGN||Regeneron Pharmaceuticals Inc.||F||C||D|
|STX||Seagate Technology Plc||D||C||D|
|TRGP||Targa Resources Corp.||D||D||D|
|TSU||TIM Participacoes S.A.||C||D||D|
|UAL||United Continental Holdings Inc.||F||C||D|
|VRTX||Vertex Pharmaceuticals Inc.||F||C||D|
|VRX||Valeant Pharmaceuticals International||F||D||F|