As an investor, it doesn't pay to follow the crowd.

In this series, though, we highlight a possible exception -- the collective wisdom of our CAPS community. Read the next section if you're unfamiliar with our methodology. Skip it if you want to go straight to the results.

Why this crowd is different
Jumping into a stock because your rich neighbor did, or because you heard about it from your friend's uncle who used to work on Wall Street, or because CNBC has been talking about it nonstop is a recipe for disaster.

If there's one thing I've learned as a stock analyst, it's that any stock can be gussied up to sound like a world-beater. If there's a second thing I've learned, it's that being a smart person doesn't make you a good investor.

In the hands of a smart person with good communication skills, the never-were and never-will-be stocks sound like tickets to instant fortune. The ancient Greek philosophers made the distinction between rhetoric and knowledge. The former is convincing; the latter is true.

That's why we factor in track record in our Motley Fool CAPS community. We invite everyone to give stocks an outperform rating (akin to a "buy" call) or underperform rating (akin to a "sell" call) in CAPS. We then use those opinions to calculate a rating for each stock -- from one to five stars (five being the best). But -- and this is a big distinction -- we give more weight to the opinions of folks whose picks have performed well in the past.

The top 10 underperform calls in the market
So, with that methodology as prelude, I present to you the 10 one-star stocks with the most CAPS community member underperform ratings. (I used a minimum market capitalization of $100 million and the proviso that must be listed on a major U.S. exchange). Remember, stocks are rated on a five-star scale by our CAPS community, so one-star stocks are in the lowest quintile and are consensus underperforms.

Company Name

 Market Capitalization
(in Millions)

52-Week Price Change


CAPS Rating
(out of 5)

Underperform Picks

Vonage (NYSE: VG)





     1,104 (Nasdaq: OSTK)






Pulte (NYSE: PHM)






Toll Brothers (NYSE: TOL)






Lennar (NYSE: LEN)






KB Home






Crocs (Nasdaq: CROX)






Beazer Homes (NYSE: BZH)






Sears Holdings






D.R. Horton






Source: Motley Fool CAPS. NM= not meaningful. TTM = trailing 12 months.

You'll notice that half of the companies' P/E ratios aren't meaningful because of losses. Not coincidentally, six of the 10 are homebuilders. The CAPS community is very skeptical of these stocks, but contrarians may find value here. Many value investors have become interested in an Eddie Lampert-led Sears (click here to read more). At some point, I believe there could be deals in housing as the market continues to ignore the sector. On the other hand, I chose Beazer Homes as worst stock for 2008 and investors will want to see if it has addressed my concerns since then (click here for that article).

But more CAPS members think Vonage is an underperform than any other stock. Do you think it deserves this lack of love? Make your thoughts known in CAPS by clicking here. Or just go there to do further research on one of these stocks.

Anand Chokkavelu doesn't own shares of any company mentioned. The Fool has a disclosure policy.