2-Star Stocks Poised to Plunge: Blue Nile?

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, online jeweler Blue Nile (NAS: NILE) has received a distressing two-star ranking.

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

Blue Nilefacts

Headquarters (founded)Seattle (1999)
Market Cap$467.6 million
IndustryInternet retail
Trailing-12-Month Revenue$348.0 million
ManagementInterim CEO Vijay Talwar (since 2011)
CFO David Binder (since 2011)
Return on Equity (average, past 3 years)32.8%
Cash/Debt$89.4 million / $744,000
CompetitorsBIDZ.com
Signet Jewelers
Zale

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

On CAPS, 23% of the 864 members who have rated Blue Nile believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, All-Star huddaman, succinctly summed up the bear case for our community:

- Diamond business has slowed recently, but that's just a short term problem.
- Blue Nile is struggling to grow and may cut prices to better compete ...
- Their advantage is their cool website and first mover advantage. So far, the stagnant growth in sales proves they haven't been able to execute well and take advantage of that. The cool factor of the website can be replicated for under [$1 million] cost.
- Finally the high P/E they have been awarded that would generally be acceptable is not acceptable here because of the earlier points.

If you want to retire rich, you need to protect your portfolio from any undue risk. Luckily, we've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2012." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

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. Motley Fool newsletter services have recommended buying shares of Blue Nile. Motley Fool newsletter services have recommended creating a position in Blue Nile. 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.

Copyright © 1995 - 2012 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