Our Danger Zone reports aim to identify those firms that, when looking below the surface, have struggling businesses and highly overvalued stock prices. However, the thesis does not always play out as we expect and, at times, the stock continues garnering investor interest and only grows more overvalued.
The market awards the most value to the companies that give the most back. It punishes those that do not create value. Figure 1 shows how well our Danger Zone picks have done.
CEO David Trainer sat down with Chuck Jaffe of Money Life and MarketWatch.com to talk about our Danger Zone pick this past week: Danger Zone: WhiteWave Foods (WWAV).
This week’s Danger Zone focuses on a company with a history of failed acquisitions that operates in a crowded market. Once the rest of the market catches on to the divergence between economic and accounting earnings, this stock is in for a big drop.
Our Most Attractive Stocks (-5.4%) underperformed the S&P 500 (-3.8%) last month. Our Most Dangerous Stocks (-5.7%) outperformed the S&P 500 (-3.8%) last month.