Zacks Sell List Highlights: Avnet, Coca-Cola, Family Dollar Stores, and PMC-Sierra

Business Wire, Oct 6, 2004

CHICAGO -- Zacks.com releases details on a group of stocks that are part of their exclusive list of Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell). Since inception in 1988 the S&P 500 has outperformed the Zacks #5 Ranked Strong Sells by 141.8% annually (11.97% vs. 4.5% respectively). While the rest of Wall Street continued to tout stocks during the market declines of the last few years, we were telling our customers which stocks to sell or avoid. Among the #5 ranked stocks today we highlight the following companies: Avnet, Inc. (NYSE:AVT) and The Coca-Cola Company (NYSE:KO). Further they announced #4 Rankings (Sell) on two other widely held stocks: Family Dollar Stores, Inc. (NYSE:FDO) and PMC-Sierra (NASDAQ:PMCS). To see the full Zacks #5 Ranked list of Stocks to Sell Now then visit: http://at.zacks.com/?id=92

Here is a synopsis of why these stocks have a Zacks Rank of 5 (Strong Sell) and should most likely be sold or avoided for the next 1 to 3 months. Note that a #5/Strong Sell rating is applied to 5% of all the stocks we rank:

Avnet, Inc. (NYSE:AVT) is one of the world's largest distributors of semiconductors, interconnect, passive and electromechanical components, enterprise network and computer equipment, and embedded sub-systems from leading manufacturers. Avnet has experienced a number of downward revisions from analysts over the past several weeks, and earnings estimates for the year ending June 2005 remain below levels from two months ago by 29 cents, or approximately -16%. The company will report its next quarterly results on October 28, but stated in its fiscal fourth quarter report from mid-August that earnings per share for the quarter would come in between 30 cents and 35 cents per share. Such a result would mark an improvement over the year-ago period, but was nonetheless below the consensus. Avnet did put together a solid fiscal fourth quarter, including net income of 40 cents per share on revenues of $2.64 billion, both of which easily topped year-ago levels. But investors may want to stay patient and hold off on opening or deepening a position at the moment until those earnings estimates head higher.

The Coca-Cola Company (NYSE:KO) is the world's largest beverage company. In mid-September, Coca-Cola announced that second half 2004 earnings per share will be negatively impacted by challenging operating conditions in key markets. The company now expects third quarter earnings per share of between 46 cents and 48 cents, prior to the consideration of any impairment charges, which was less than the consensus. Earnings estimates for the year ending December 2004 moved lower 11 cents, or approximately -5%, within the past month, as several analysts have decided to lower their revisions. Coca-Cola understands that such a performance demonstrates the need for corrective actions and initiatives to put the company back on its proper growth course. Given its determination to do just that, and its large presence in its industry, the company should be able to get back on track in the future. But in the meantime, investors may want to stay patient and wait for its earnings estimates to gain more upside momentum.

Below is a synopsis of why these two stocks have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next 1 to 3 months. Note that a #4/Sell rating is applied to 15% of all the stocks we rank:

Family Dollar Stores, Inc. (NYSE:FDO) is one of the fastest growing discount store chains in the United States. The company provides consumers with good values in low cost, basic merchandise for family and home needs. Fiscal 2004 turned out to be a difficult year for Family Dollar Stores, as the economy was not favorable for its low and low-middle income customer base. Late last month, the company reported fiscal fourth quarter net income of $43 million, which was down -9.9% from $47.7 million in the year-ago quarter. Net income per share of 26 cents matched the consensus, but fell short of last year's 28 cents. The company has experienced some downward revisions from analysts, and earnings estimates for the year ending August 2005 slipped 13 cents, or about -8%, in the past seven trading days. Over the past two months, expectations are down 21 cents, or about -12%. However, sales in the quarter advanced 9.6%, and Family Dollar Stores is taking action on the issues that it can control. The company's focus for fiscal 2005 will be on initiatives that will be the growth engines that will drive increases in sales and earnings, but for now the best move may be to watch for its earnings estimates to get back on an upward track before taking position.

PMC-Sierra (NASDAQ:PMCS) is a leading provider of high-speed broadband communications and storage semiconductors and MIPS-based microprocessors. PMC-Sierra is scheduled to report its third quarter results on October 20th. Late last month, the company lowered its revenue outlook for that quarter due primarily to changes in customer demand and inventory levels associated with recent reductions in the planned deployment rates of DSL equipment by Asian service providers for the second half. The company now expects revenue between $71 million and $73 million, compared to the previous outlook of $86 million to $92 million. Second quarter revenues were $85.7 million. Earnings estimates for this year, ending December 2004, are below levels from one month ago by 10 cents, or about -31%. PMC-Sierra is one of the most innovative companies in its space and should be in a better position down the road. But in the present, investors may want to refrain from allocating funds to their portfolios until its earnings estimates rise.