As an investor, it doesn't pay to follow the crowd.
In this series, though, we highlight a possible exception -- the collective wisdom of our CAPS community. Read the next section if you're unfamiliar with our methodology. Skip it if you want to go straight to the results.
Why this crowd is different
Jumping into a stock because your rich neighbor did, or because you heard about it from your friend's uncle who used to work on Wall Street, or because CNBC has been talking about it nonstop is a recipe for disaster.
If there's one thing I've learned as a stock analyst, it's that any stock can be gussied up to sound like a world-beater. If there's a second thing I've learned, it's that being a smart person doesn't make you a good investor.
In the hands of a smart person with good communication skills, the never-were and never-will-be stocks sound like tickets to instant fortune. The ancient Greek philosophers made the distinction between rhetoric and knowledge. The former is convincing; the latter is true.
That's why we factor in track record in our Motley Fool CAPS community. We invite everyone to give stocks an outperform (akin to a "buy" call) or underperform rating (akin to a "sell" call) in CAPS. We then use those opinions to calculate a rating for each stock -- from one to five stars (five being the best). But -- and this is a big distinction -- we give more weight to the opinions of folks whose picks have performed well in the past.
The top 10 industrial underperform calls
With that methodology as prelude, I present to you the 10 one and two-star industrial stocks with the most CAPS community member underperform ratings (I used a minimum market capitalization of $100 million and the proviso that it must be listed on a major U.S. exchange). Remember, stocks are rated on a five-star scale by our CAPS community, so one and two star stocks are consensus underperforms.
|
Company Name
|
Market Capitalization (in millions)
|
52 Week Price Change %
|
Price-to-Earnings (TTM)
|
CAPS Rating (out of 5)
|
Underperform Picks
|
|
Ballard Power Systems (Nasdaq: BLDP )
|
$149
|
(1%)
|
NM
|
**
|
118
|
|
Valence Technology (Nasdaq: VLNC )
|
$103
|
(50%)
|
NM
|
**
|
102
|
|
Ener1 (Nasdaq: HEV )
|
$458
|
(51%)
|
NM
|
*
|
87
|
|
Shuffle Master (Nasdaq: SHFL )
|
$429
|
6%
|
18.2
|
**
|
82
|
|
Broadwind Energy (Nasdaq: BWEN )
|
$172
|
(79%)
|
NM
|
**
|
57
|
|
Mohawk Industries (NYSE: MHK )
|
$3,107
|
(11%)
|
21.8
|
**
|
54
|
|
Rockwell Automation (NYSE: ROK )
|
$7,078
|
19%
|
19.9
|
**
|
34
|
|
Albany International
|
$503
|
1%
|
48.8
|
*
|
25
|
|
JinkoSolar
|
$526
|
0%
|
61.7
|
*
|
24
|
|
H & E Equipment Services
|
$257
|
(29%)
|
NM
|
**
|
15
|
Source: Motley Fool CAPS. NM= not meaningful. Data as of Aug. 25 close. Price change from Aug. 28, 2009.
There's been some big stock losses in these 10 stocks over the past year with two companies' stock prices halving and one losing more than three-quarters of its value. The CAPS community doesn't see a rosy future for these 10 either.
More CAPS members think Ballard Power Systems is an underperform than any other industrial stock. Do you think it deserves this lack of love? Make your thoughts known in CAPS by clicking here. Or just go there to do further research on one of these stocks.
You can see the flip side -- the top-rated industrial stocks by clicking here.
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