1-Star Stocks Poised to Plunge: Beacon Roofing?

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Based on the aggregated intelligence of 130,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, roofing material distributer Beacon Roofing Supply (Nasdaq: BECN) has received the dreaded one-star ranking.

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

Beacon Roofing facts

Headquarters (founded)	Peabody, Mass. (1928)
Market Cap	$627.72 million
Industry	Trading companies and distributors
TTM Revenue	$1.85 billion
Management	CEO Robert Buck (since 2003) COO Paul Isabella (since 2007)
52-Week Price Change (BECN and S&P 500)	37.5% and (37.5%)
Competitors	Builders FirstSource (Nasdaq: BLDR) Bluelinx Holdings
CAPS members bearish on BECN also bearish on	Ryland Group (NYSE: RYL) D.R. Horton (NYSE: DHI) Pulte Homes (NYSE: PHM)
CAPS members bullish on BECN also bullish on	Wal-Mart (NYSE: WMT) General Electric (NYSE: GE)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 35 of the 82 members who have rated Beacon Roofing -- or 43% -- believe the stock will underperform the S&P 500 going forward. These bears include goofyfool and TSIF, both of whom are ranked in the top 6% of our community.

In December, goofyfool warned that Beacon Roofing might need to be replaced:

[Accounts receivable] is increasing disproportionately to [net income]. But what's worse, is that management keeps "hyping" the stock with statements about increased demand for their roofs....

A tightening cash position coupled with mounting debt will prove fatal in an environment where building materials won't be needed on the same scale for at least a couple more years.

In a pitch from last month, TSIF also noticed a few holes in the roofer:

The little roofing company that seems to be bucking the building trend in a big way. This past quarter beat analysts to shreds and made a very good profit...however, just like you sometimes need to discount one time losses, sometimes you need to discount gains....profit was up due to Hurricane IKE. No hurricanes forecast the next two quarters, although there might have been some ice damage.....

If roofing is so good why are insiders selling like the house is on fire? 255% quarterly Q/Q growth not sustainable. Debt high, Inventory high, negative net tangible assets, watch accts receivable and change in liabilities in the cash flow.

What do you think about Beacon Roofing, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 130,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.