Zacks Sell List Highlights: Wachovia Corp., Toll Brothers Inc., Motorola and Starbucks Corp

Business Wire, Feb 13, 2008

CHICAGO -- Zacks.com releases details on a group of stocks that are currently members of the exclusive Zacks #5 Rank List - Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell): Wachovia Corporation (NYSE: WB) and Toll Brothers Inc. (NYSE: TOL). Further, Zacks announced #4 Rankings (Sell) on two other widely held stocks: Motorola (NYSE: MOT) and Starbucks Corporation (NASDAQ: SBUX). To see the full Zacks #5 Rank List - Stocks to Sell Now visit: http://at.zacks.com/?id=92

Since inception in 1988, the S&P 500 has outperformed the Zacks #5 Rank List -- Stocks to Sell Now by 129% annually ( 5.3% vs. 12.1%). While the rest of Wall Street continued to tout stocks during the market declines of the last few years, Zacks told investors which stocks to sell or avoid.

Here is a synopsis of why WB and TOL have a Zacks Rank of #5 (Strong Sell) and should most likely be sold or avoided for the next one to three months. Note that a #5 Strong Sell rating is applied to 5% of all the stocks in the Zacks Rank universe:

Wachovia Corporation (NYSE: WB) can count itself among the financial institutions that are feeling the pain from the fallout in the subprime lending sector. When the bank reported its fourth quarter results, it revealed that its profit had fallen 98% from the same period last year. Wachovia said the slide in earnings was the result of a $1.7 billion reduction in the value of certain portfolios and the allocation of $1.5 billion that needed to be set aside to cover bad loans. This was the second time in two quarters that the company has failed to meet analyst estimates. Analysts have been slashing their earnings estimates for Wachovia as bad news continues to filter in concerning credit markets.

Toll Brothers (NYSE: TOL) has been suffering the effects from the massive fallout in the housing and credit markets as well. This luxury home builder's stock price has been slumping for quite some time now, moving from its all-time high in 2005 of $60, to its recent lows beneath $16. The company's quarterly results have been mixed for the last year, with misses in two quarters. Analyst estimates have also been steadily falling for Toll Brothers, as the market continues to be flooded with negative data concerning the housing market. Within the last 30 days, half of the covering analysts have lowered their current-year estimates, driving the projection sharply lower to a negative reading of 26 cents.

Here is a synopsis of why MOT and SBUX have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next one to three months. Note that a #4 Sell rating is applied to 15% of all the stocks ranked by Zacks:

Motorola (NYSE: MOT) shares have fallen sharply in the last 18 months, dropping from their 52-week high of over $26 to the recent low of below $10. Motorola has been the victim of continued internal restructuring programs, and intense global competition from other industry players like Nokia. Motorola's market share has dipped to 13%, below that of both Samsung and Nokia. Confirming the trend is the company's fourth quarter results, reported on Jan 24. Profit dropped 84% compared to the same period last year, and the company said it did not know when it would be able to halt its slide in market share.

Starbucks Corp. (NASDAQ: SBUX) has been battling a slumping stock price for the last 16 months. The company has recently been confronted with a number of unique challenges. The competition for traditional Starbucks customers has been heating up, with competitors like Dunkin Doughnuts and McDonalds making direct bids at grabbing some of Starbucks customers with both coffee and espresso initiatives. There has also been a certain measure of consumer backlash, with Starbuck's customers expressing disapproval over both coffee prices and longer lines. Every single covering analyst has been lowered current-quarter projections within the past 30 days.

Truly taking advantage of the Zacks Rank requires the understanding of how it works. The free special report; "Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions" is available to provide this insightful background. Download a free copy now to prosper in the years to come at http://at.zacks.com/?id=93

About the Zacks Rank

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank Stocks have generated an average annual return of 32.2%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained 43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 129% annually ( 5.3% vs. 12.1%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

The performance of the Zacks Rank portfolios for annual and year-to-date periods are the linked monthly total returns (price changes dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from January 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month. The portfolios created monthly from 1988 through September 2006 exclude ADRs and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. These performance numbers have been audited from 1995 through 2003 by Virchow, Krause & Company, LLP.