4-Star Stocks Poised to Pop: Conn's

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electronics and appliance retailer Conn's (Nasdaq: CONN) has earned a respected four-star ranking.

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

Conn's facts

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

On CAPS, 94% of the 347 members who have rated Conn's believe the stock will outperform the S&P 500 going forward. These bulls include tekennedy and All-Star jed71, who is ranked in the top 5% of our community.

Just last month, tekennedy highlighted a few of Conn's pros:

-The retail portion of the company is performing relatively well, driven by strong gross margins. ...
-The company has worked out a few outside financing arrangements for both their higher and lower quality financing. ...
-The company still seems to be well managed as there have been no serious mis-steps as of yet. The lack of a share issuance at these fire-sale prices, which admittedly would make their job a lot easier, would destroy significant shareholder value.

While slumping sales and unusually high exposure to credit risk have weighed heavily on Conn's shares, several Fools in our community think they're just too cheap to pass up. Currently, Conn's trades at a forward P/E of 7.8, representing a noticeable discount to fierce retail foes like Best Buy (10.1), Wal-Mart (12.2), Costco (19.9), and Home Depot (14.4). Of course, with Conn's also sporting industry-topping leverage ratios, the stock remains one of the riskier turnaround bets you'll find.

Nevertheless, CAPS All-Stars like jed71 explain why the bet might be worth making:

The second quarter results are giving me a few small rays of hope. The cash flow statement has FINALLY shown some improvement. Growing accounts receivable over the past several quarters had really eaten into Conn's cash and they were forced to take some pretty costly financing steps. ... This, of course, does not indicate that they are out of the woods, but it is a positive step in the right direction. They have also begun to take a few small steps to reduce debt. ...

Is this a 100% knock it out of the park multibagger? Eh, I'm going to say no. But that's part of the game -- you take risks where you think there may be a little value. I am taking a shot at this price and think I have good odds closing this positive at a much higher price. Price Target currently ~$9 a share.

What do you think about Conn's, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!