The Terrible Two’s: BVN, CBI and ESLR
These three stocks started the day in the red, as far as our proprietary
PowerRatings (for Traders) ratings go, and things have only gone downhill from
there.
Compania de Minas Buenaventura
(
BVN |
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PowerRating), Chicago Bridge and Iron
Company
(
CBI |
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PowerRating), and Evergreen Solar, Inc.
(
ESLR |
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PowerRating) all have
earned PowerRatings (for Traders) ratings of 2. Stocks with PowerRatings (for
Traders) ratings of 2 have historically underperformed, tending to decline
significantly in price over the next five days.
The only thing worse than a PowerRating (for Traders) rating of 2, is a
PowerRatings (for Traders) rating of 1. Unfortunately for BVN, CBI and ESLR,
all three found their 2 PowerRatings (for Traders) ratings slip down to that 1
level within the first few hours of trading this morning.
This makes these three the kind of stocks traders want to avoid or even
short. All three stocks are optionable, which means that traders can purchase
put options on these stocks rather than shorting them outright.
Interestingly, all three companies are plays in fields such as natural
resources and alternative energy, industries that have been popular (perhaps too
popular) with traders and investors in recent months.
Compania de Minas Buenaventura is the largest publicly-traded precious metals
company in Peru. In addition to being a major holder of mineral rights in Peru,
the company operates three mines in the country, and has controlling interest in
four more.
Chicago Bridge and Iron Company is one of the leading engineering,
procurement and construction companies in the world. CBI specializes in
“lump-sum” turnkey products for clients in the natural resources industry.
Evergreen Solar, Inc. develops, manufactures and markets solar power
products. The company is perhaps best known for a patented crystalline silicon
technology known as String Ribbon which reportedly uses less silicon than is
traditionally required.
It’s not every day that a stock falls to a PowerRatings (for Traders) rating
of 1. But that is precisely what these three stocks did, signaling the
potential for significant declines over the next five days. Whether you want to
short stocks like these, buy put options against them, or simply double check to
make sure that your trading portfolio isn’t laboring under these sort of 1 and 2
rated PowerRatings (for Traders) stocks, our list of 1’s and 2’s is updated
regularly and is well worth consulting throughout the trading day.
David Penn is Senior Editor at TradingMarkets.com