Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, smartphone maker Palm (NASDAQ:PALM) has received the dreaded one-star ranking.

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, Calif. (1992)

Market Cap

$2.24 billion


Communications Equipment

Trailing-12-Month Revenue

$735.9 million


CEO Jonathan Rubinstein (since June 2009)

CFO Douglas Jeffries (since January 2009)

Return on Equity (average, last five years)

(3.1%) and (29.6%)

6-Month Return




Nokia (NYSE:NOK)

Research In Motion (NASDAQ:RIMM)

CAPS Members Bearish on PALM Also Bearish on

Ford Motor (NYSE:F)

D.R. Horton (NYSE:DHI)

CAPS Members Bullish on PALM Also Bullish on


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

Over on CAPS, fully 387 of the 607 All-Star members who have rated Palm -- some 64% -- believe the stock will underperform the S&P 500 going forward. These bears include ViolentCapital and JakilaTheHun, both of whom are ranked in the top 3% of our community.

Just last week, ViolentCapital addressed Palm's seemingly Pre-mature price run:

[T]he trajectory on this stock is plain stupid, they are a 1 product company -- a 1 product company that is steps behind the competition in every respect … Fact is that no one major, profitable, financially-well-to-do carrier really gives two cents about [Palm], simply because they have already developed relationships with the larger players that will be sticking around for much longer -- Apple, Blackberry, Samsung, Google, HTC, and whoever else is out there.

In a pitch from two weeks earlier, JakilaTheHun echoes that bearish sentiment:

I believe insane expectations are already priced into the stock. The Pre will probably sell well, but I don't think it will sell nearly as well as the market seems to believe. Consider the fact that Palm is competing in a very crowded smartphone market dominated by [Apple] and [Research In Motion].

Two days after the launch of the Pre, Apple unveiled its iPhone 3G with a price tag of $99. Note that this is $100 less expensive than the Pre even if you include the $100 rebate for the Pre.

Palm also decided to create limited availability for the Pre in its initial run. ... By the time the Pre is available in mass quantities, will it still be "in"?

I expect Palm to retrace back to the $5 - $8 range at some point. Even if the Pre continues to be a wild success, the market has overly priced this into the stock and there are reasons to believe that once the initial buzz around the Pre dies out, that Palm is in for hard times again.

What do you think about Palm, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 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. Google is a Rule Breakers recommendation. The Fool's disclosure policy always gets a perfect score.