Based on the aggregated intelligence of 160,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, oil and gas explorer Houston American Energy (Nasdaq: HUSA) has received the dreaded one-star ranking.

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

Houston American facts

Headquarters (Founded)

Houston (1981)

Market Cap

$576.6 million


Oil and gas exploration and production

Trailing-12-Month Revenue

$6.0 million


Founder/CEO John Terwilliger
CFO James Jacobs

Trailing-12-Month Return on Equity


1-Year Return



Stone Energy (NYSE: SGY)
Berry Petroleum (NYSE: BRY)
Brigham Exploration (Nasdaq: BEXP)

Highly Rated Retail Energy Alternatives

ExxonMobil (NYSE: XOM)
Chevron (NYSE: CVX)
ConocoPhillips (NYSE: COP)

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

On CAPS, 73% of the 157 members who have rated Houston American believe the stock will underperform the S&P 500 going forward. These bears include boghead and FreeMortal, both of whom are ranked in the top 15% of our community.

Just last month, boghead seemed highly skeptical of the stock's stunning price performance: 

I have been following this stock for a month or so. I have been blown away by the rising price. Looks like their earnings don't support the rally, or this price at all.

In an earlier pitch, FreeMortal expands on why Houston American bulls may have a problem:

They have about $5 million in cash and about $1 million in receivables. Considering the fact that this is a micro cap, that isn't too bad, if they had their act together. They had twice as much cash last year and they are steadily burning through it with operations and equipment purchases and still no profit.

There is a Texas expression that applies here: They are spending all their time saddling up instead of riding.

The price is already too high by any measure and this latest run-up appears to be just hype. Gravity will soon take over.

What do you think about Houston American, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!  

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.