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Zacks Issues Sell Recommendations on the Following 4 Stocks: Atlantic Coast Airlines Holdings, Wet Seal, TCF Financial, and Tyco

Company Release - 5/23/2003 6:00 AM ET

CHICAGO--(BUSINESS WIRE)--May 23, 2003--Zacks.com releases details on a group of stocks that are part of their exclusive list of Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell). Note that since 1988 the S&P 500 has outperformed the Zacks #5 Ranked stocks by 166.7% annually (11.3% vs. 4.2% respectively). While the rest of Wall Street continued to tout stocks during the market declines of the last few years, we were telling our customers which stocks to sell in order to save themselves the misery of unrelenting losses. Among the #5 ranked stocks today we highlight the following companies: Atlantic Coast Airlines Holdings, Inc. (NASDAQ:ACAI) and The Wet Seal, Inc. (NASDAQ:WTSLA). Further they announced #4 Rankings (Sell) on two other widely held stocks: TCF Financial Corporation (NYSE:TCB) and Tyco International Ltd. (NYSE:TYC). To see the full Zacks #5 Ranked list of Stocks to Sell Now then visit: http://stockstosellprbw.zacks.com/

Here is a synopsis of why these stocks have a Zacks Rank of 5 (Strong Sell) and should most likely be sold or avoided for the next 1 to 3 months. Note that a #5/Strong Sell rating is applied to 5% of all the stocks we rank:

Atlantic Coast Airlines Holdings, Inc. (NASDAQ:ACAI), a holding company of Atlantic Coast Airlines, is a regional airline serving states in eastern and Midwestern United States. In late April, ACAI reported first quarter 2003 net income of 4 cents per diluted share, which was a penny below the consensus and well below the year-ago level of 31 cents. The quarter's results were impacted by several items, including severe weather conditions that caused the cancellation of some departures, damaged aircraft, and the fact that the fee-per-departure rates paid by United Airlines weren't set for 2003. Earnings estimates for this year and next have declined by approximately 51 cents and 41 cents from levels three months ago. However, the company is taking actions to address the problems that it faces, and earlier this month Atlantic Coast Airlines reported that April 2003 traffic rose by +14% from the year-ago month. ACAI should have a much brighter future, but it is currently caught in one of the most challenged spaces in the marketplace. Therefore, to be on the safe side during this unpredictable time, investors may want to consider holding off on an ACAI position until its earnings estimates get back on track.

The Wet Seal, Inc. (NASDAQ:WTSLA) is a nationwide specialty retailer of fashionable and contemporary apparel and accessory items designed for consumers with a young, active lifestyle. For the fiscal 2003 first quarter, WTSLA reported a net loss of 29 cents per share, compared to a year-ago profit. The result fell in between the company's loss range of 27 cents to 31 cents set in early May, which was steeper than what Wall Street was expecting at the time. Net sales in the quarter fell to $123.6 million from $156.6 million last year, while same-store sales declined by -25.5%. WTSLA said that May same-store sales could be somewhat weaker than April. Earnings estimates for this year have moved from a profit to a loss over the past month. Nevertheless, the company said it made progress in its efforts to refresh its product offerings and reconnect with its core customer base. WTSLA is looking forward to better prospects for the second half of the year, especially when it rolls out its back-to-school line. Once this difficult time for retailers pass, WTSLA should see improved results. For the moment however, investors may want to watch for more buoyant earnings estimates before adding or deepening a WTSLA position.

Below is a synopsis of why these two stocks have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next 1 to 3 months. Note that a #4/Sell rating is applied to 15% of all the stocks we rank:

TCF Financial Corporation (NYSE:TCB) is a Minnesota-based national financial holding company. Although TCB reported an +11% rise in its 2003 first quarter diluted earnings per share, several analysts have lowered their earnings estimates on the company in the midst of a high level of economic uncertainty. Most of the company's more recent revisions for this year and next have been to the downside, and estimates for this year and next currently sit about 10 cents and 20 cents off from levels three months ago respectively. Nevertheless, its first quarter earnings result of 83 cents per share matched expectations and improved upon last year. An improved economic environment should help analysts to feel more comfortable about TCB's industry, and could therefore translate into improved estimates. In the interim, investors may want to think about holding off on a TCB position for a little while longer and wait for its earnings estimates to move higher.

Tyco International Ltd. (NYSE:TYC), a diversified manufacturing and service company, is a leading manufacturer and servicer of electrical and electronic components and undersea telecommunications systems, the world's largest manufacturer, installer, and provider of fire protection systems and electronic security services, has strong leadership positions in disposable medical products, plastics, and adhesives, and is the largest manufacturer of flow control valves. Despite reporting several positives in its second quarter report in late April, TYC's earnings estimates continue to trend downward. The company's intensified internal audit and review efforts identified charges of 55 cents per share, and TYC reported a loss from continuing operations of 23 cents per share for the quarter. However, excluding items, TYC would have matched Wall Street's expectations at 32 cents. Furthermore, revenues for the quarter improved by +4% to $9 billion and its free cash flow surged by +47% to $833 million. But analysts still appear wary of bumping up the company's earnings estimates, which remain at reduced levels from months ago, especially in this still uncertain economic environment. TYC believes that it has identified all, or nearly all, legacy accounting issues, but it seems that the company will have to show more before a majority of analysts jump on board. In the interim, investors may want to think about playing it safe for the moment and wait for its earnings estimates to move higher before taking a TYC position.

To truly take advantage of the Zacks Rank, you need to first understand how it works. That's why we created the free special report; "Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions." Download your free copy now to prosper in the years to come. http://freezrguidebw.zacks.com/

About the Zacks Rank

For over 15 years the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since 1988 the #1 Ranked stocks have generated an average annual return of +33.6% compared to the (1)S&P 500 return of only +11.3%. Plus this exclusive stock list has generated average gains of +13.3% during the last 3 years; a substantial return compared to the large losses suffered by most investors during that time frame. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). And since 1988 the S&P 500 has outperformed the Zacks #5 Ranked stocks by 166.7% annually (11.3% vs. 4.2% respectively). This is a healthy change from traditional Wall Street Brokerage firms who rarely give stocks Sell ratings even as the share price and earnings forecast tumble. Thus, the Zacks Rank system can truly be used to effectively manage the trading in your portfolio.

For continuous coverage of Zacks #1 and #5 Ranked stocks, then get your free subscription to "Profit from the Pros" e-mail newsletter where we highlight stocks to buy and sell using our time tested stock evaluation model. http://zacksrankprbw.zacks.com/

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    SOURCE: Zacks.com

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