By
Ilan Moscovitz
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More Articles
June 14, 2010
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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 the slew of recent financial disasters illustrated, 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:
- Companies that employ equal to or more than 15-to-1 leverage
- Rated one or two stars, the lowest possible ranks, by our CAPS community.
My screen turned up only seven stocks:
|
Company
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Debt/Equity
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CAPS Rating
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AIG (NYSE: AIG )
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46:1
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**
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Nelnet (NYSE: NNI )
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31:1
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*
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Student Loan Corp. (NYSE: STU )
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28:1
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**
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First State Bancorp (FSNM)
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26:1
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**
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FelCor Lodging Trust (NYSE: FCH )
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16:1
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**
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Central Pacific Financial (NYSE: CPF )
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15:1
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*
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General Growth Properties (NYSE: GGP )
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15:1
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**
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Data from Motley Fool CAPS.
Now, just because CAPS players are ripping on them doesn't mean these companies couldn't turn it around. But remember, since we began tracking CAPS in early 2007, two-star stocks have lost 34%, while one-star stocks have fallen 57%. Moreover, these names appear highly leveraged based on their debt/equity ratios.
Are these companies poised for a turnaround? Or is the pain just beginning? Come join us at CAPS to let us know what you think. Our 165,000-strong (and counting) CAPS community wants to hear your opinion.
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