This report red flags the firms with the most underfunded pensions and the most aggressive assumptions for returns they expect to earn on the pension assets.
CEO David Trainer sat down with Chuck Jaffe of Money Life to talk about our Danger Zone pick this past week: Pension Accounting: Expected Returns on Plan Assets.
Some stocks are more dangerous than others. In an anemic economic environment, the most dangerous stocks are those with issues that are lurking behind the scenes or in footnotes.
In his weekly column, The Trader, Vito Racanelli features my in-depth work on the funky accounting Delta Airlines' (DAL) uses to mask $26 billion on off-balance sheet liabilities.
Mr. Racanelli agrees
I recommend investors avoid Delta Airlines (DAL). I think the stock could see significant downward pressure as more investors realize how the company is propping up its earnings with relatively aggressive accounting for its pension and postretirement plan (“pensions”), which are already seriously underfunded.
I take great pleasure in recommending investors buy Clorox (CLX) – an attractive-rated stock, not just because of its strong profitability and cheap valuation but also because of the unusually high quality and integrity of its financial reporting.