2-Star Stocks Poised to Plunge: Research In Motion

Before you go, we thought you'd like these...
Before you go close icon

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, BlackBerry maker Research In Motion (NAS: RIMM) has received a distressing two-star ranking.

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

RIM facts

Headquarters (Founded)

Waterloo, Canada (1984)

Market Cap

$16.7 billion

Industry

Communications equipment

Trailing-12-Month Revenue

$20.6 billion

Management

Co-Founder/Co-Chairman/Co-CEO Michael Lazaridis
Co-Chairman/Co-CEO James Balsillie

Return on Equity (Average, Past 3 Years)

37.1%

Cash/Debt

$2.4 billion / $0

Competitors

Apple (NAS: AAPL)

Google (NAS: GOOG)

Microsoft (NAS: MSFT)

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

On CAPS, 20% of the 5,582 members who have rated RIM believe the stock will underperform the S&P 500 going forward. These bears include mprosise and All-Star XMFConnor, who is ranked in the top 10% of our community.

Earlier this summer, mprosise succinctly summed up the Research In Motion bear case: "Unless the Blackberry folks can come out with a product that blows away the competition (Android and Apple), they are doomed to the dustbin like Palm and other such innovators who forgot to continue innovating."

Over the past five years, RIM's operating margin has declined 680 basis points. Meanwhile, fierce rival Apple has seen its operating margins more than double over the same time frame, while Google and Microsoft have seen their operating margins drop by just 20 and 80 basis points, respectively.

CAPS All-Star XMFConnor expands on the RIM underperform argument:

I think this is a broken company. It reminds me of when I looked at Barnes & Noble awhile back. While the issues are a bit different, I think that people trying to make this a "value-play" based on cheap metrics will be unpleasantly be surprised by their quick demise as Apple, Google, Microsoft and others assault their business segments.

What do you think about RIM, 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!

Interested in another easy way to trackRIM?Add it to your watchlist.

At the time this article was published 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.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners