Stocks to Avoid Now?

If you're thinking of selling your stocks, you're not alone. According to insider tracker Form 4 Oracle, executives at these three firms cashed in shares last week:

The week's selling

Company

Closing Price 3/19/09

Total Value Sold

52-Week Change

Copart (Nasdaq: CPRT  )

$30.00

$51,770,647

(20.8%)

Stericycle (Nasdaq: SRCL  )

$48.11

$15,252,938

(5.9%)

Toll Brothers (NYSE: TOL  )

$17.92

$17,423,272

(16.7%)

Sources: Fool.com, Yahoo! Finance, Form 4 Oracle.

Insiders sell for many reasons, ranging from compensation to estate or tax planning to just plain getting out, but the reasons are rarely (if ever) given. Having said that, these are open market sales, made by executives who have 100% control over the timing of their trades. Not so at Panera Bread (Nasdaq: PNRA  ) and Netezza (NYSE: NZ  ) , whose insiders have mostly been cashing in on a predetermined schedule known as a 10b5-1 trading plan.

Companies typically find their way here because those selling either (a) exhibit good timing or (b) are dumping significant portions of their stakes. For Copart, it's the latter. Board member Barry Rosenstein's investment partnership has been selling in bulk since December.

Rosenstein's selling is troublesome for three reasons. First, he's a professional investor. Second, he isn't the only one to have sold recently; board member Thomas Smith trimmed his stake in January. And third, Rosenstein's JANA Partners has liquidated close to 75% of its remaining holdings in Copart over the past week.

Crazy. Or so might say several of the All-Star investors in our 130,000-strong Motley Fool CAPS community. "This company recycles used cars back to the market and in a web savvy way to boot," wrote CAPS investor Trimalerus on Wednesday. "Making this a hybrid green-tech industrial, a blend of both worlds. [N]ice." 

So why is he selling? Color me mystified. These aren't the sorts of margin-induced blowouts that we've seen at Boston Scientific (NYSE: BSX  ) and, more recently, Heartland Payment Systems (NYSE: HPY  ) .

All we know is that Rosenstein sees reason to get out now, and he has another 600,000-plus shares available to sell. Be careful, Fool.

This stock might cost you
Our community is far less sanguine when it comes to builder Toll Brothers:

Metric

Toll Brothers

CAPS stars (5 max)

*

Total ratings

1,427

Percent bulls

42.6%

Percent bears

57.4%

Bullish pitches

118 out of 233

Data current as of March 20, 2009.

CAPS investor assistryan captured the mostly negative investor zeitgeist in a pitch from earlier this week:

The housing industry still has a long way to fall. Tolls' wheel house is mid to upper end mcmansions. Tighter credit is hitting this price range the worst. As the market stabilizes the lower end will recover first, follow at least 2-3 years later by the upper end market. In addition the majority of the markets around the country are way over built. It is still going to take years to clean up inventory levels.

Fair? I've a hard time envisioning management describing its business in such dire terms. New construction rose 22% last month. Yet there's a huge caveat baked into that number: Most of the building was for multifamily complexes such as condos and apartments.

And then there's CEO Robert Toll's selling. Toll parted with one million shares this week, pocketing more than $17 million in proceeds.

There's your update. See you back here next week for more stocks you should avoid.

Get the inside scoop on stocks of all sizes with related Foolishness:

Fool contributor Tim Beyers also writes for Motley Fool Rule Breakers. He didn't own stock in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool.

Heartland Payment Systems is a Motley Fool Hidden Gems recommendation. Copart is a Motley Fool Stock Advisor selection. Try any of these market-beating services free for 30 days. The Fool owns shares of Copart, and its disclosure policy is the undisputed heavyweight champ among disclosure policies.


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