2-Star Stocks Poised to Plunge: Nokia?

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, mobile handset giant Nokia (NYS: NOK) has received a distressing two-star ranking.

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

Nokia facts

Headquarters (Founded)Espoo, Finland (1865)
Market Cap$19.95 billion
IndustryCommunications equipment
Trailing-12-Month Revenue$61.06 billion
ManagementChairman/CEO Stephen Elop (since 2010)
CFO Timo Ihamuotila (since 2009)
Return on Equity (Average, Past 3 Years)6.7%
Cash / Debt$13.9 billion / $7.8 billion
Dividend Yield10.9%
CompetitorsApple (NAS: AAPL)
Google (NAS: GOOG)
Research In Motion (NAS: RIMM)

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

On CAPS, 10% of the 2,909 members who have rated Nokia believe the stock will underperform the S&P 500 going forward. These bears include markofzorro and chinamantsan.

Earlier this summer, markofzorro tapped the stock as a losing proposition: "Sadly, Nokia seems unable to keep up with the blistering pace of innovation from Apple and Android phones. Its dismal performance lately seems to presage even more drops to come."

Over the next five years, in fact, Nokia is only expected to grow its bottom line at a rate of 6.9% annually. That's much slower than that of rivals Apple (22.5%), Google (26.2%), and Research In Motion (6.1%).

CAPS member chinamantsan elaborates on the bear case:

Unless Nokia really changes their gears up and does something innovative and quickly, they will simply fade away. Nokia phones have never been huge in the United States but at this point they are slowly losing grip on the international market as well. ...

Nokia phones have always had great hardware but their software department is certainly lacking. I'm a huge phone geek and have been in the mobile industry for the last four years. I've been waiting for Nokia to come out swinging as HTC, Samsung, Motorola, and LG have to compete with the major success of Apple but they seem to be too hardheaded in their ways and because of this have been in a huge slump for the last few years. I see Nokia going the same path as Palm in that they will eventually either get bought out or just forgotten entirely.

What do you think about Nokia, 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!

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Apple and Google. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool owns shares of Apple, Google, and Research In Motion. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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