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2-Star Stocks Poised to Plunge: TiVo

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 7:56PM

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Market-lagging returns could be written in this two-star stock.

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, digital video recorder company TiVo (NASDAQ:TIVO) has received a distressing two-star ranking. While one-star stocks have been the worst performers, our data has shown that two-star stocks still lag the market by a significant margin and should be approached with caution; conversely, highly-rated stocks have outperformed the S&P.

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

TiVo facts

Headquarters (founded)

Alviso, Calif. (1997)

Market Cap

$730.50 million

Industry

Application Software

TTM Revenue

$264.61 million

Management

CEO Thomas Rogers
Co-Founder/Chief Technology Officer James Barton

Annual Revenue Growth (average, past five years and TTM)

17.5% and (3.9%)

Competitors

Sony (NYSE:SNE)
Motorola (NYSE:MOT)

CAPS members bearish on TIVO also bearish on:

Sirius XM Radio (NASDAQ:SIRI)
Ford

CAPS members bullish on TIVO also bullish on:

Netflix (NASDAQ:NFLX)
Microsoft (NASDAQ:MSFT)

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

Over on CAPS, fully 185 of the 925 members who have rated TiVo -- some 20% -- believe the stock will underperform the S&P 500 going forward. These bears include tklong and CAPS All-Star Joker1001.

In late October, tklong noted that TiVo "didn't update their technology as quickly as they needed to, and worse, they are being outperformed by lock in contracts like [DIRECTV Group] dvr and [Comcast (NASDAQ:CMCSA)]. ... These deals are running Tivo right out of the market and negating their product."

In a more recent pitch last week, Joker1001 shares that bearish attitude, citing TiVo's deteriorating market share as reason to stay away:

Go to any electronics store and look at how many Tivo's are sitting around. People are using cable and satellite-based DVR's; they're cheaper, as easy to use, and are HD friendly. Digital transition in 2009 won't make much of a difference, if you've got a 25-year-old TV the last thing you're going to buy is a DVR.

What do you think about TiVo, 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.

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool’s own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

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

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Stocks Mentioned

TiVo Corporation Stock Quote
TiVo Corporation
TIVO
Sirius XM Holdings Inc. Stock Quote
Sirius XM Holdings Inc.
SIRI
$6.78 (0.74%) $0.05
Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$249.30 (2.72%) $6.60
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$40.00 (1.52%) $0.60
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$291.91 (1.70%) $4.89
Sony Corporation Stock Quote
Sony Corporation
SONY
$86.80 (1.14%) $0.98
Motorola Solutions, Inc. Stock Quote
Motorola Solutions, Inc.
MSI
$255.97 (1.46%) $3.69

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

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