1-Star Stocks Poised to Plunge: Talbots?

Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, women's apparel retailer The Talbots (NYSE: TLB  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Talbots' business and see what CAPS investors are saying about the stock right now.

Talbots facts

Headquarters (founded)	Hingham, Mass. (1947)
Market Cap	$779.7 million
Industry	Apparel retail
Trailing-12-Month Revenue	$1.2 billion
Management	CEO Trudy Sullivan (since 2007) CFO Michael Scarpa (since 2009)
Return on Capital (average, past 3 years)	2.6%
Compound Annual Revenue Growth (over past 3 years)	(15.6%)
Cash/Debt	$4.7 million / $37.4 million
1-Year Return	68%
Competitors	AnnTaylor Stores (NYSE: ANN  ) Chico's FAS (NYSE: CHS  ) Macy's (NYSE: M  ) Nordstrom (NYSE: JWN  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 66% of the 416 members who have rated Talbots believe the stock will underperform the S&P 500 going forward. These bears include All-Star GundersonGroup, who is ranked in the top 15% of our community.

Just last week, GundersonGroup touched on just how bad Talbots seems to be: "Look at the population demographics in the United States going forward from this point. And consider how poorly management took care of shareholder equity when they had the boomer consumer working in their favor."

A stressed-out balance sheet, intense competition, and an overall gloomy economic outlook continue to fuel the stock's one-star CAPS rating. While generally positive recent results out of women's apparel foes AnnTaylor, Chico's, Macy's, and Nordstrom certainly bode well for Talbots' near-term results, our community remains skeptical about the company's long-term appeal. With lower returns on equity than each of those rivals, Talbots' current valuation doesn't seem to compensate investors for the extra risk.

What do you think about Talbots, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!