From Green to Blue: Four Stocks Fall from Favor

The stocks are Fairfax Financial Holdings (NYSE: - ),Molina Healthcare (NYSE: - ), Northeast Utilities (NYSE: - ) and Packaging Corporation of America (NYSE: - ).

The difference between a PowerRatings (for Investors) rating of 8 and a rating of 7 is not colossal. Our research, going back to 1995, suggests that there is about a 1% difference between the average returns of 7 and 8 rated stocks one year later (17.13% for the 8's versus 16.16% for the 7's). And 8-rated stocks have historically been higher one year later more than 74% of the time -- compared to just under 68% of the time for 7-rated stocks.

But what investors need to be wary of is the possibility that stocks that fall from a PowerRatings (for Investors) rating of 8 to a PowerRatings (for Investors) rating of 7 might soon fall to a rating of 6, or 5 or even lower. A downgrade from one rating to the next lower rating does not create a trend. But investors -- particularly those who decide to stick with downgraded stocks -- should be alert to the possibility of the initial downgrade becoming a sign of more worrisome things to come.

Let's take a quick, closer look at the four stocks that have fallen from green to blue as of this morning:

Fairfax Financial Holdings (FFH) is a Canadian financial services holding company. Fairfax Financial specializes in property and casualty insurance and reinsurance, as well as investment management and insurance claims management.

The company is a member of the high PowerRatings (for Industries) rated Property and Casualty Insurance industry. Some of the more attractive stocks in this group -- in PowerRatings (for Investors) terms -- include Berkshire Hathaway, with a PowerRatings (for Investors) rating of 10, and Partnerre Limited, with a PowerRatings (for Investors) rating of 9.

Molina Healthcare (MOH) is another one of our 8's that fell to a 7 as of this morning. Molina Healthcare is a multi-state managed care company that coordinates the delivery of health care services to patients who receive their benefits by way of government sponsored programs for low-income families and individuals.

Molina belongs to the Health Care Plans industry, which is an industry with a PowerRating of 8. A number of stocks in this industry -- from Aetna (NYSE: - ) to United Health Group (NYSE: - ) also feature 8 PowerRatings, and may represent better choices for investors looking to possibly replace Molina Healthcare in their investment portfolios.

Northeast Utilities (NU) provides franchised retail electric services through its three subsidiaries: The Connecticut Light & Power Company, Public Service Company of New Hampshire and Western Massachusetts Electric Company.

The Diversified Utilities industry is only an average ranked industry -- PowerRatings (for Industry) rating of 6. But there are likely better utilities options for investors than Northeast Utilities. Three such options are Energy East Corp (NYSE: - ), Consolidated Edison (NYSE: - ) and Northwestern Corp (NasdaqGS: - ). All three of these utilities stocks has PowerRatings (for Investors) ratings of 9.

The last stock I want to highlight here is Packaging Corporation of America (PKG). This company produces containerboard and corrugated products including conventional shipping containers. Packaging Corporation of America is actually in a very strong industry -- Packaging and Containers -- with a PowerRatings (for Industries) rating of 9. But with its PowerRatings (for Investors) rating of 7, Packing Corporation joins Ball Corporation (NYSE: - ) and Sealed Air Corporation (NYSE: - ) -- both also 7-rated stocks -- as an average "house" in what is still a pretty decent stock "neighborhood."

From Green to Blue: Four Stocks Fall from Favor Recap:

Fairfax Financial Holdings (FFH). PowerRatings (for Investors) rating: 7

Molina Healthcare, Inc. (MOH). PowerRatings (for Investors) rating: 7

Northeast Utilities (NU). PowerRatings (for Investors) rating: 7

Packaging Corporation of America (PKG). PowerRatings (for Investors) rating: 7.

For Today's Top Rated Stocks go to .

David Penn is Senior Editor at PowerRatings.net