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1-Star Stocks Doomed to Drop: Palm

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 8:08PM

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Market-lagging returns could be written in this 1-star.

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Treo and Centro smartphone maker Palm (NASDAQ:PALM) has received the dreaded one-star ranking. Our data has shown that one-star stocks woefully lag the market average; conversely, five-star stocks outperform the S&P by a significant margin.

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

Palm facts

Headquarters (founded)

Sunnyvale, California (1992)

Market Cap

$204.75 million

Industry

Computer Hardware

TTM Revenue

$1.32 billion

Management

CEO Edward Colligan (since 2005)

CFO Andrew Brown (since 2004)

Return on Equity (average last five years and TTM)

8.6% and (20.3%)

Competitors

Nokia (NYSE:NOK),

Research In Motion (NASDAQ:RIMM)

CAPS members bearish on PALM also bearish on

Vonage (NYSE:VG),

Overstock.com (NASDAQ:OSTK)

CAPS members bullish on PALM also bullish on

Apple (NASDAQ:AAPL),

Microsoft (NASDAQ:MSFT)

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

Over on CAPS, fully 328 of the 788 members who have rated Palm -- some 42% -- believe the stock will underperform the S&P 500 going forward. These bears include CAPS All-Star PlanToWin and dibble905.

In October, PlanToWin wrote that Palm is "going to get crushed by the iPhone and all of the iPhone knock-offs. The only hope for the company long term is to be bought. I think that the chances of that in the near term are slim and long term the value of the company will be seriously diminished."

In a more recent pitch from last week, dibble905 agrees, writing:

Palm has absolutely nothing up it's sleeves to combat this recession. This is probably Palm's best and last opportunity to leap frog its competition, yet, it has absolutely no means of doing so. Palm has no competitive advantage to its peers and it will remain so. Even if this company is to survive, it will remain below it's competition when times are better.

What do you think about Palm, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Apple is a Motley Fool Stock Advisor pick. Microsoft and Nokia are Inside Value selections. The Fool's disclosure policy always gets a perfect score.

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Stocks Mentioned

Palm, Inc. Stock Quote
Palm, Inc.
PALM
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$291.91 (1.70%) $4.89
Apple Inc. Stock Quote
Apple Inc.
AAPL
$172.10 (2.14%) $3.61
Nokia Corporation Stock Quote
Nokia Corporation
NOK
$5.21 (0.00%) $0.00
BlackBerry Stock Quote
BlackBerry
BB
$6.78 (0.59%) $0.04
Overstock.com, Inc. Stock Quote
Overstock.com, Inc.
OSTK
$31.71 (2.13%) $0.66
Vonage Holdings Corp. Stock Quote
Vonage Holdings Corp.
VG

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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