2-Star Stocks Poised to Plunge: Tractor Supply?

Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, farm and ranch store operator Tractor Supply Company (Nasdaq: TSCO  ) has received a distressing two-star ranking.

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

Tractor Supply facts

Headquarters (Founded)

Brentwood, Tenn. (1983)

Market Cap

$1.94 billion

Industry

Specialty retail

Trailing-12-Month Revenue

$3.13 billion

Management

CEO James Wright (since 2007)
CFO Anthony Crudele (since 2005)

Revenue and Net Income Growth (Over Past Year)

10.7% and 7.9%

Price-to-Cash Flow (TSCO and S&P 500)

15.1 and 6.7

Year-to-Date Return

48.6%

Competitors

Home Depot (NYSE: HD  )
Lowe's (NYSE: LOW  )

CAPS Members Bearish on TSCO Also Bearish on

Amazon.com (Nasdaq: AMZN  )
Baidu.com (Nasdaq: BIDU  )

CAPS Members Bullish on TSCO Also Bullish on

Apple (Nasdaq: AAPL  )
Johnson & Johnson (NYSE: JNJ  )

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

On CAPS, 14.1% of the 234 members who have rated Tractor Supply believe the stock will underperform the S&P 500 going forward. These bears include tenmiles, the seventh ranked member in all of CAPS, and tortillatree.

Just last week, tenmiles tapped the stock as a good way to lose some hay: "[S]tarting to look gassy; fundamentals are good, but not spectacular, as most of recent upside driven by cost controls, not organic sales growth -- pushing 20x earnings."

In a pitch from last month, tortillatree also urged Fools not to bet the farm on Tractor Supply's expansion plans:

[T]hey're a strong company and have no debt, but they're growing too fast, opening stores in poor locations, opening stores too close to existing stores, cutting hours to the point that they can't keep their stores clean/organized, and stretching themselves too thin all around. my money says their current investments are going to lose money for them, and a year or so from now they're going to have to admit it, close some stores, spend money advertising to try to earn their customers back ... and get back to their basics.

What do you think about Tractor Supply, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. The CAPS community is waiting to hear your opinions. CAPS is 100% free, so get started!  

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Home Depot and Lowe's are Motley Fool Inside Value picks. Amazon and Apple are selections of Stock Advisor. Baidu is a recommendation of Rule Breakers, and Johnson & Johnson is a choice of Income Investor. The Fool's disclosure policy always gets a perfect score.


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