1-Star Stocks Poised to Plunge: KB Home?

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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, homebuilder KB Home (NYS: KBH) has received the dreaded one-star ranking.

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

KB Home facts

Headquarters (Founded)Los Angeles (1957)
Market Cap$760.0 million
IndustryHomebuilding
Trailing-12-Month Revenue$1.3 billion
ManagementCEO Jeffrey Mezger (since 2006)
CFO Jeff Kaminski (since 2010)
Return on Equity (Average, Past 3 Years)(19%)
Cash/Debt$415.1 million / $1.6 billion
CompetitorsLennar
PulteGroup
Toll Brothers

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 54% of the 1,238 members who have rated KB Home believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, All-Star Chemdawg, touched on KB Home's seemingly unsustainable price action:

[N]ice run-up... this far this fast based on basically no real data doesn't usually end well short term. While I am bullish long term on home builders as the prices have stabilized to a large degree here in southwest [F]lorida, we still have plenty of inventory held by banks. [T]hey are withholding properties to try to create pent up demand ... but the properties are still selling far below what replacement cost would be on a new built home. [I]t's still too early to try to call a bottom ... increase in stock price over the past month is a recipe for a correction short term.

What do you think about KB Home, 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!

Want to see how well (or not so well) the stocks in this series are performing? Follow the newTrackPoisedToCAPS account.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. 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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