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 retailer underperform calls
So, with that methodology as prelude, I present to you the 10 one- and two-star retail 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
|
|
Amazon.com (Nasdaq: AMZN )
|
$56,807
|
53%
|
52.4
|
**
|
1,139
|
|
Overstock.com (Nasdaq: OSTK )
|
$331
|
14%
|
28.1
|
*
|
759
|
|
Sears Holdings (Nasdaq: SHLD )
|
$7,176
|
1%
|
27.8
|
*
|
612
|
|
Abercrombie & Fitch (NYSE: ANF )
|
$3,140
|
6%
|
33.3
|
*
|
348
|
|
RadioShack (NYSE: RSH )
|
$2,328
|
20%
|
10.9
|
*
|
326
|
|
Pier 1 Imports (NYSE: PIR )
|
$723
|
144%
|
10.6
|
*
|
324
|
|
Macy's (NYSE: M )
|
$8,353
|
24%
|
13.9
|
*
|
317
|
|
Gap
|
$11,034
|
(15%)
|
9.6
|
**
|
314
|
|
Talbots
|
$724
|
66%
|
NM
|
*
|
274
|
|
Dillard's
|
$1,389
|
84%
|
10.9
|
*
|
234
|
Source: Motley Fool CAPS. NM= not meaningful.
Amazon.com is a tough stock to doubt. It's one of the few dot-com stocks that's trading higher today than it did during the height of the tech bubble. It's almost always traded at crazy multiples but has marched upward. Our co-founder David Gardner has been a fan of it since the '90s and recommended it in our Stock Advisor newsletter back in 2002, and it remains a core stock. Yet the CAPS community isn't impressed, rating it just two stars.
In fact, more CAPS members think Amazon.com is an underperform than any other retail 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 popular stocks.
You can see the flip side -- the top-rated retail stock -- by clicking here.
RSS Headlines
Fool UK