As bull markets grow into maturity, brokerages find it less and less advisable to give companies a “sell” rating, as many companies so rated continue rising in sympathy with the market, making what might have been fundamentally sound analysis appear off-base. Likewise, “buy” and not “hold” comes to be more and more the default position. Even “strong buy,” a rating meant for only the best of the best, becomes more common, not because brokerages are more likely to assign the rating, but because they become less likely to downgrade the rating. Such may be the case with the companies we have identified today, some of which are rated “strong buy” or its equivalent from at least one major research firm, and all are rated 5 stars (out of 5) by S&P. Some of the companies on the list have recently been upgraded; others have been rated highly for a long time—maybe too long.
Our own conclusions differ dramatically from these rosy assessments, some of which, we suggest, are the inevitable byproducts of the maturing bull market: bull residue, if you will. Peering beyond the bull residue, we see serious threats, perhaps even existential threats, looming for each of these companies, and hence rate each of them “Get out now, while the getting is good.”