2-Star Stocks Poised to Plunge: Teavana?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, specialty tea retailer Teavana Holdings (NYSE: TEA  ) has received a distressing two-star ranking.

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

Teavana facts

Headquarters (founded) Atlanta (1997)
Market Cap $516.2 million
Industry Specialty stores
Trailing-12-Month Revenue $177.5 million
Management Founder/Chairman/CEO Andrew Mack
CFO Daniel Glennon
Trailing-12-Month Return on Capital 132.1%
Cash/Debt $20.0 million / $0
Competitors Hain Celestial
GourmetFoodMall.com
Whole Foods Market

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 39% of the 75 members who have rated Teavana believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, deal4412, touched on Teavana's seemingly unsustainable valuation:

P/E is 28 at time of writing and stock seems overvalued as growth will likely slow. Sales, while growing, should be higher for a microcap with such a high valuation. Hard to envision high end teas taking off without a luxurious [Starbucks]-style cafe experience to justify the price.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Whole Foods. Motley Fool newsletter services have recommended buying shares of Whole Foods. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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