We know that insider buying, stock buybacks, and raising guidance are considered bullish signs. But what about the opposite?

Insider selling isn't always a sign of rough waters ahead -- they might need the money for Junior's education, or for reasons that have nothing to do with the business. And while stock dilution can be a bad thing, splitting a stock to make more shares available can be good.

Don't look down
What about lowering guidance? It could be a warning of poor performance for the foreseeable future, or it could be a small speed bump on the road to further profits. When a company forecasts lower profits, its stock usually takes a hit. Maybe it's time to get out, too -- or maybe it's time to buy more!

To help tell the difference, we're going to look at a handful of companies that recently announced lower earnings guidance. Then we'll turn to the Motley Fool CAPS community to learn which of these stocks Foolish investors think have the power to turn lemons into lemonade.


Forecast Period

New Guidance

Analyst Forecast

Year-Ago Actual Earnings

CAPS Rating


FY 2007





Golfsmith (NASDAQ:GOLF)

Q1 2007





Hibbett Sports (NASDAQ:HIBB)

Q1 2007





Halliburton (NYSE:HAL)

Q1 2007





U-Store-It (NYSE:YSI)*

Q1 2007





Source: Company SEC filings; Yahoo! Finance. CAPS Ratings courtesy of Motley Fool CAPS.
*YSI guidance is for funds from operation (FFO), a widely used measure of real estate performance.

As you can see, CAPS investors think pretty highly of most of these companies. Maybe they know something the market doesn't. The system currently asks more than 24,000 professional and novice investors alike to rank the thousands of stocks in our CAPS universe, overweighting the opinions of the most successful and accurate among them. From that data, CAPS rates each company from one to five stars, with five stars being the best.

Star of the lemonade stand
There does seem to be one stock that has the power to make investors pucker up: Halliburton. According to nearly 1,000 investors, the energy engineering firm has the juice to overcome the short-term pits. Some 977 CAPS players took a public stand and think Halliburton will outperform the market, with almost 200 of these investors being ranked as "all-stars" -- investors who score higher than 80% of all other players.

Listen to these pitches:

  • WCWlooky, who's ranked in the top 2% of our raters, says that while unsure of the timing of higher oil and gas prices, it "will happen because of limited supply, growing demand and political turmoil in many regions of production."
  • saxonglass, another top-ranked player (with a 97.77 rating), argues that "it's still one of the best in what it does and the world needs what it does," and it's coming at a 10% discount these days.
  • For a bit of an opposing view, highly ranked all-star TDRH (with a rating in the top seventh percentile) says it's "just a matter of time before the oversight groups bring to light some massive fraud from the 'No-Bid' contracts for Iraq."

So are the Bulls right? The Bears? Want to tell us what your opinion is on these companies? Then click here to join the Fool's groundbreaking achievement in collective investor intelligence. It's completely free to join.

Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.