2 Dangerous Stocks Investors Should Avoid At All Costs

I constantly scour the market for stocks on the cusp of major bullish trend changes, but over the past few months, there has been little opportunity thanks to the market correction. When the headwinds blow that hard, few ships can sail.

But with stocks rebounding sharply off their February lows and the broader market S&P 500 in the black for the first time this year, my Alpha Trader system is once again lighting up with fresh buy signals.

For those of you who aren't familiar, I use a quantitative system to rank 6,000 publicly traded U.S. stocks based on a proprietary indicator known as the Alpha Score.

This indicator combines an equity's relative strength and a key fundamental metric favored by investment luminaries such as Don Yacktman, Warren Buffett and Charlie Munger. Every stock has an Alpha Score, and it can range from 0 (worst) to 200 (best).

I only consider buying stocks in the top 30th percentile, but typically their scores put them in the top 15th, 10th, or even top 5th percentile. These are the stocks most likely to jump double or triple digits in less than a year's time.

Here are some of the stocks the Alpha Score alerted us to in the past two years:

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But just as importantly, the Alpha Score keeps us out of stocks that are lagging the market. While some popular names no doubt seem attractive at current beaten-down levels, the Alpha Score can help us separate the potential winners from those likely to remain losers, such as...

Toll Brothers (NYSE: TOL)

Despite a strengthening U.S. housing market, shares of this preeminent, high-end U.S. homebuilders basically went nowhere for more than three years before breaking sharply lower in early 2016.

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