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2-Star Stocks Poised to Plunge: Dell

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 7:58PM

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Market-lagging returns could be written in these two stars.

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, computer giant Dell (NASDAQ:DELL) 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 Dell's business, and see what CAPS investors are saying about the stock right now.

Dell facts

Headquarters (founded)

Round Rock, Texas (1984)

Market Cap

$22.92 billion

Industry

Computer hardware

Trailing-12-Month Revenue

$63.66 billion

Management

Founder/CEO Michael Dell
President of Global Operations Michael Cannon

Net Income Growth (average, past 5 years and trailing 12 months)

2.9% and (6.3%)

Competitors

Hewlett-Packard (NYSE:HPQ)
IBM (NYSE:IBM)

CAPS members bearish on Dell also bearish on:

Microsoft (NASDAQ:MSFT)
General Motors (NYSE:GM)

CAPS members bullish on Dell also bullish on:

Apple (NASDAQ:AAPL)
Google

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

Over on CAPS, some 29% of the 5,363 members who have rated Dell believe the stock will underperform the S&P 500 going forward. These bears include CAPS All-Star Fenix2606 and lschneider03.

Earlier this month, Fenix2606 wrote that Dell "just can't compete in this sector anymore. They lack the innovation of Apple and HP and have been too slow to adapt to consumer preferences. ... Couple this with lower disposable income, and Dell has plenty of room left on the downside."

In a pitch from last month, lschneider03 shares that bearishness, tapping Dell as a PC has-been:

This company is still living in its past and believes that its direct to consumer distribution strategy sets it apart from its competitors. At one time it did, but no longer (it's been copied......even Wal-Mart (NYSE:WMT) does it now). Dell basically came into the industry, shook it up, flushed a lot of the excess profits of the industry down the drain with its lower pricing (due to its distribution strategy) and then they forgot to innovate after that. In the meantime, HP and Compaq get together and start kicking this Austin company's backside all over the place. DELL is a pretender and their best days will always be in their rear view mirrors.

What do you think about Dell, 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. Microsoft, Dell, and Wal-Mart are Motley Fool Inside Value picks. Apple is a Stock Advisor selection. Google is a choice of Rule Breakers. The Fool's disclosure policy always gets a perfect score.

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Stocks Mentioned

Dell Technologies Inc. Stock Quote
Dell Technologies Inc.
DELL.DL
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$132.22 (1.85%) $2.40
HP Inc. Stock Quote
HP Inc.
HPQ
$34.65 (1.26%) $0.43
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
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$134.01 (1.11%) $1.47
General Motors Company Stock Quote
General Motors Company
GM
$39.48 (2.65%) $1.02

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

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