10 Stocks to Avoid


So, which 10 are the stocks to avoid? Here's what our community of 6,800 at Motley Fool CAPS says:


Total Ratings

Bearish Picks

Bear Ratio

(NYSE: VG  )








General Motors




(Nasdaq: SOLD  )








XM Satellite
(Nasdaq: XMSR  )




Ford Motor
(NYSE: F  )












Sirius Satellite
(Nasdaq: SIRI  )




Data current as of Sept. 25, 2006.

In CAPS, both Dell and Google one-star stocks, thanks to substantial bearish sentiment among "all-star players," otherwise known as those whose portfolios have performed better than at least 80% of the community. (All-star ratings count more than do other picks in building star ratings for stocks in the CAPS database.)

ExxonMobil, too, has been given the stink-eye from all-stars. What's with the skepticism? All-star Rediggles explains:

Being long on oil requires being long on an airline stock because, at any point, the rug could be pulled out from under [ExxonMobil]. And, as is, it's fairly valued.

Worst of the worst
That's debatable, of course. Fortunately, Exxon isn't even close to the worst of the worst. That distinction falls to VoIP phone maven Vonage, which counts a breathtaking 90.2% of its ratings as bearish. Motley Fool Rule Breakers team member Brian Lawler, with nine recommendations of his pitch by fellow CAPS community members, gets the nod in explaining the bear case:

I think this is the most telling statement about Vonage's prospects: 'Vonage expects to have positive adjusted operating income as early as the first quarter of 2008 ... 2008!!!'

Furthermore, Brian explains, Vonage is referring merely to operating income, which may or may not translate into real cash flow. (A history of staggering losses at Vonage suggests it won't.)

Most interesting to me, though, is that Brian was among the lowest 20% in CAPS when he made his bearish calls on Vonage. Today, he's outperforming more than 87% of the community.

Fellow Fool and Rule Breakers team member Charly Travers has done even better. Also in the lower 20% when he made his underperform call on Vonage in May, Charly has since risen to the No. 2 spot in the CAPS universe. His analysis shows why:

Former CEO and current chief strategist paid a $22 million fine to the SEC due to improprieties at his former position at Datek. This company is bleeding cash. It's in a highly competitive industry. How are they going to make money when Skype gives away the service for next to free? The big plunge on the day of the IPO is another red flag. The statement that they will use their IPO cash for advertising is another red flag. May as well set all that money on fire.

Burn, baby, burn. Good call, Charly.

Earn your Fool cap!
Are these really the worst stocks in the world? Which are your one-star losers? Get in the game now, and tell us what you think. Or, if you'd rather, choose one of the more than 1,200 stocks that have yet to earn a star rating in CAPS, including retailer Dollar Tree Stores (Nasdaq: DLTR  ) and wireless-messaging service USA Mobility (Nasdaq: USMO  ) . Click here to rate either of them now. It's entirely free. Your Fool cap is waiting.

XM Satellite Radio is a Motley Fool Rule Breakers selection. Take a 30-day tryout of Rule Breakers to find out more about the four multibagger stocks David and his team have uncovered in the first two years of the service. There's no obligation to buy, and it's easy to get started. Just click here now.

Fool contributorTim Beyershas 33 picks in his CAPS portfolio, including NVE (Nasdaq: NVEC  ) , which he believes is a wonderful short candidate. Think he's wrong?Get in the gameand add your own rating. Tim didn't own shares of any of the companies mentioned in this story at the time of publication. Get the skinny on all of Tim's stock holdings by checking his Foolprofile. Dollar Tree is aMotley Fool Inside Valuepick, and USA Mobility is a formerMotley Fool Hidden Gemspick. The Motley Fool'sdisclosure policyalways beats the average.

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