Sift through the wreckage of beaten-down companies, and you'll likely find a few wonderful stocks. Lately, the stock market has blessed patient investors with plenty of thrashed financial companies.
But the savviest investors know that willy-nilly contrarianism isn't a sure path to riches. As financial disasters Countrywide Financial (NYSE:CFC) and Thornburg Mortgage (NYSE:TMA) illustrate, companies often get punished for all the right reasons. And in those cases, their plight can be as bad as you think, and worse.
With that in mind, I used our new Motley Fool CAPS screening tool to find beaten-down financial stocks that the online CAPS community loves to hate. These are the stocks CAPS players avoid like the plague.
They are also:
- Capitalized at more than $200 million.
- Down at least 25% over the past year.
- Rated one star, the lowest possible rank, by our CAPS community.
Remember, in the first year for which we have data, one-star companies flamed out with an average loss of nearly 17%.
|
Company |
Share Price |
Market Cap |
Price Drop |
|---|---|---|---|
|
Ambac Financial (NYSE:ABK) |
$1.91 |
$548 million |
(97.8%) |
|
Fannie Mae (NYSE:FNM) |
$22.34 |
$21.8 billion |
(65.8%) |
|
Lehman Brothers (NYSE:LEH) |
$22.80 |
$12.6 billion |
(69.9%) |
|
Merrill Lynch (NYSE:MER) |
$34.54 |
$34.0 billion |
(58.7%) |
|
Washington Mutual (NYSE:WM) |
$5.96 |
$6.3 billion |
(86.0%) |
Data from Motley Fool CAPS and Yahoo! Finance as of June 23. Price drop calculated from 6/29/07 through 6/23/08.
Are these companies poised for a turnaround? Or is the pain just beginning? Come and join us at CAPS to let us know what you think. Our 110,000-strong (and counting) CAPS community wants to hear your opinion.
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