What Makes Hydrogenics Corporation (HYGS) a Strong Sell? - Tale of the Tape

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Hydrogenics Corporation HYGS, which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in HYGS.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 2 estimates moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus loss estimate to widen, going from a loss of 16 cents a share a month ago to its current level of 61 cents.

Also, for the current quarter, Hydrogenics Corporation has seen 2 downward estimate revisions versus no revision in the opposite direction, widening the consensus loss estimate from a loss of 13 cents a share to a loss of 22 cents over the past 30 days.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 22.6% in the past month.

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don't have a long time horizon to wait.

If you are still interested in the alternative energy space, you may instead consider some better-ranked stocks including Covanta Holding Corporation CVA, Ormat Technologies Inc. ORA and U.S. Geothermal Inc. HTM. While Covanta Holding and Ormat Technologies hold a Zacks Rank #1 (Strong Buy), U.S. Geothermal holds a Zacks Rank #2 (Buy) and may be better selections at this time.

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