Over a mountain of woes and against heightened volatility, the U.S. stock market continues its heroic bull run, hitting multiple highs on several occasions this year. Stepped-up economic activity, rising business and consumer confidence, recovering housing fundamentals and continued job creation have lent tremendous support to the economy.

But will these factors actually continue to drive the stocks higher in the coming months? Geopolitical tensions, a global slowdown, lower oil prices, the collapse in the euro and persistent weakness in emerging economies like China and Brazil have cast a dark cloud on the stock world, resulting in many high-flying stocks that might soon run out of steam. Most importantly, a strong U.S. dollar is making exports less competitive, thereby hurting sales and profit margins of the big American firms.

Given this, many stocks have generated handsome returns in the year-to-date timeframe. However, surging stocks do not always reflect the true picture of the company’s growth potential. These might actually be fooling investors and the odd ones that need to be weeded out from one’s portfolio.

The best performers are not always the fundamentally sound stocks. This can easily be justified with our Zacks Stock screener, which will prevent you from being an April Fool.

We have screened through a number of following metrics to find out the phony highfliers:

1.    Double-digit year-to-date returns
2.    Unfavorable Zacks Rank #4 (Sell) or 5 (Strong Sell) or 3 (Hold).
3.    Current year negative EPS growth
4.    Negative current year earnings estimate revision over the past three months
5.    Bottom Zacks Industry Rank

Below are three stocks that have been misleading investors so far in the year and need to be brought to notice.  

Carrizo Oil & Gas Inc. CRZO – Up 19.8%

Based in Houston, TX, Carrizo Oil & Gas is engaged in the exploration, development, and production of oil and gas in the Barnett Shale area in North Texas and along the Texas and Louisiana onshore Gulf Coast regions.

Macquarie Infrastructure Company LLC MIC – Up 15.2%

Based in New York, Macquarie Infrastructure owns, operates and invests in a portfolio of infrastructure businesses that provide basic and daily services to businesses and individuals primarily in the United States. The company witnessed strong negative earnings revisions over the past 90 days from $2.01 to a loss of $1.11 for the current year. This represents a massive year-over-year earnings decline of 163%.

The stock has a Zacks Rank #4 and a sluggish Zacks Industry Rank in the bottom 18%.

Activision Blizzard Inc. ATVI – Up 14.2%

Based in Santa Monica, CA, Activision Blizzard is the world’s largest online and console game publisher, with leading market positions across all categories of the rapidly growing interactive entertainment software industry. While the company has seen earnings growth of 19.9% over the past five years, it is expected to decline 19.4% this year. The Zacks Consensus Estimate is currently pegged at $1.07, a sharp drop from $1.38 projected three months ago.

PEG ratio of 3.17 is also higher for Activision Blizzard when compared to the industry average of 1.70. ATVI has a Zacks Rank #4 and the worst Zacks Industry Rank in the bottom 15%.

Bottom Line

While the above-mentioned stocks have easily outpaced the broad market index by wide margins this year, we feel they are fooling investors and should better be ignored.