1-Star Stocks Poised to Plunge: ZAGG?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, handheld device accessory specialist ZAGG (Nasdaq: ZAGG  ) has received the dreaded one-star ranking.

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

ZAGG facts

Headquarters Salt Lake City, Utah
Market Cap $311.2 million
Industry Consumer electronics
Trailing-12-Month Revenue $179.1 million
Management Founder/Chairman/CEO Robert Pedersen
CFO Brandon O'Brien
Return on Equity (average, past 3 years) 34.3%
Cash/Debt $26.4 million / $68.3 million
Competitors Apple
Forward Industries
Motorola Mobility Holdings

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

On CAPS, 35% of the 332 members who have rated ZAGG believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, All-Star kkconway, succinctly summed up the bear case for our community:

Lousy moat in an easily entered market. Great earnings won't hold up many more quarters. If they are in Wal-Mart, they'd better have a long exclusive contract, but that's not gonna happen!

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Apple and Wal-Mart. Motley Fool newsletter services have recommended buying shares of Apple and Wal-Mart, as well as creating a bull call spread position in Apple, creating a diagonal call position in Wal-Mart, and writing naked calls on ZAGG. 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.


Read/Post Comments (5) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 01, 2012, at 12:21 PM, SmurfyTurf wrote:

    Right...and when you follow the crowd you get crushed like Netflix. It comes down to one thing...timing. Now is a good time to buy because it has momentum. Since the beginning of the year I made 60% on Zagg in two months, while everyone was missing opportunity by being a pessimist and neglecting real financial research.

    Their moat is not their product it's their model, even though they have a lot of cool accessories like the ipad keypad and mobile phone stereo. Their moat is the number of sales, how quickly they distrubute, and the access to their product. For those who love their mobile devices it's an aching need to protect the screen. You've ever cracked an iPhone screen? It's an expensive process. It's either another $600 for a phone or $200 for the screen. Most people who have, will shell out the extra $20 to protect their mobile devices, also just because in the moment of purchase they felt like spending. Sure you can buy cheaper versions, but those versions aren't patented. Nor do they work. Plus by the time you wait to go onto amazon to buy a cheap version, many times people would just change their mind. The cheap won't even bother to get a cover so they aren't the market for this product.

    Chances are if you had money for an iPhone....you have money for a $20 quality screen protector. Anyways look at apple soaring, that only means more opportunities for zagg. Sure there will be competitors, but until then, enjoy the gains.

  • Report this Comment On March 01, 2012, at 2:59 PM, Badwater wrote:

    Funny, we keep hearing that same succinctly summed up case quarter after quarter.

  • Report this Comment On March 01, 2012, at 3:11 PM, TexBarrister wrote:

    kkconway must be synonymous with Jim Cramer. He's preaching the same exact thing about the "ZAGG commodity" and it's become it's own catchy little buzz phrase. What do you expect from sheep? I guess ZAGG didn't pay Cramer enough to be in the Who's Who of American Business book.

  • Report this Comment On March 01, 2012, at 3:36 PM, mcreel65 wrote:

    Just yesterday you were singing ZAGG its praises and now you're backtracking. What gives? What happened to "ZAGG Sets the Bar High"? You guys flip flop more than politicians. It would be great if you all got on the same page and quit giving confliction opinions on the same stock.

  • Report this Comment On March 01, 2012, at 4:05 PM, mmmgoody wrote:

    sounds like more short sell propaganda

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