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 $499.7 million
Industry Specialty stores
Trailing-12-Month Revenue $189.3 million
Management Co-Founder/Chairman/CEO Andrew Mack
CFO Daniel Glennon
Trailing-12-Month Return on Assets 19.1%
Cash/Debt $716.0 thousand / $9.5 million
Competitors Hain Celestial
Whole Foods Market

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

On CAPS, 29% of the 100 members who have rated Teavana believe the stock will underperform the S&P 500 going forward.

Just this past week, one of those Fools, ellentk, offered some unique insight into the Teavana bear case:

I own a teashop and have both interviewed and hired former Teavana employees who HATE it. The sales requirements, the turnover of employees, and the bait & switch on the sales floor ... all this tells me this company does not have a sustainable business model for the long term. Even customers who come into our tearoom say they were duped by Teavana.

Duped customers, unhappy employees who quit -- that's not an Apple or a Starbucks where customers love it.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Teavana, Hain Celestial, Whole Foods, Apple, and Starbucks. Motley Fool newsletter services have recommended buying shares of Whole Foods, Hain Celestial, Apple, and Starbucks and  creating a bull call spread position in Apple and writing covered calls on Starbucks. Try any of our Foolish newsletter services free for 30 days.  We Fools don't 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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