Sift through the wreckage of beaten-down companies and you'll likely find a few wonderful stocks. Lately, the stock market has blessed patient investors with plenty of thrashed financial companies.

But the savviest investors know that willy-nilly contrarianism isn't a sure path to riches. Often, companies get punished for all the right reasons. And in those cases, it can be so much worse than you think.

With that in mind, I used our new Motley Fool CAPS screening tool to find beaten-down financial stocks the online CAPS community loves to hate. These are the stocks CAPS players avoid like the plague.

They are also:

  • Capitalized at more than $200 million.
  • Down at least 25% over the past year
  • Rated one star, the lowest possible, by our CAPS community.

Remember, in the first year for which we have data, one-star companies flamed out with an average loss of nearly 17%.


Share Price

Market Cap

Alesco Financial


$205 million

Ambac (NYSE: ABK)


$1.3 billion

Capital One (NYSE: COF)


$19.9 billion

Downey Financial


$394 million

Fannie Mae (NYSE: FNM)


$27.7 billion

Freddie Mac


$16.1 billion

IndyMac (NYSE: IMB)


$263 million

Lehman Brothers (NYSE: LEH)


$24.5 billion

National City (NYSE: NCC)


$4.0 billion



$64.3 billion

Data from Motley Fool CAPS and Yahoo! Finance as of April 30.

Are these companies poised for a turnaround? Or is the pain just beginning? Come and join us at CAPS to let us know what you think. Our 100,000-strong (and counting) CAPS community wants to hear your opinion.

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Ilan Moscovitz's gelato screen turned up strawberry and mango, both of which flavors he eagerly awaits. He doesn't own any of the companies mentioned in this article. The Fool's disclosure policy is always on the menu.