Summary
Zale stock has been singled out as one of the best performers in recent weeks, but that may be changing. Here's why.
Analysis
For those investors interested in a “short” play, the Applied Finance Group (AFG) has identified 15 companies out of the Russell 2000 that they believe are overvalued. Six of the companies are in the consumer service sector notable of which is Zale Corporation. Other companies mentioned in report included Lodgenet Entertainment (LNET), Crown Media Holdings A (CRWN), Builders First Inc (BLDR), and Morgans Hotel Group Corp (MHGC).
AFG says it ranks companies according to several criteria including earnings compared to the weighted cost of capital and a management quality score, which “identifies companies with management teams that destroy wealth”. It didn’t provide individual rankings, however Zale management has watched as the company’s stock declined by more than 94%. That equates to more than a billion dollars in lost value. Zale closed at $3.76 with light trading on Thursday, July 09.
