Why Star Scientific Is Poised to Keep Plunging

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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, smokeless tobacco products specialist Star Scientific has received the dreaded one-star ranking.

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

Star Scientific facts

Headquarters (founded)

Glen Allen, Va. (2000)

Market Cap

$300.0 million

Industry

Personal products

Trailing-12-Month Revenue

$5.4 million

Management

Chairman/President/COO Paul Perito
CEO Jonnie Williams

Trailing-12-Month Return on Equity

(136.3%)

Cash/Debt

$9.5 million / $12.0 thousand

Competitors

GlaxoSmithKline
Pfizer
Vector Group


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

On CAPS, 45% of the 322 members who have rated Star Scientific believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, All-Star zzlangerhans, kindly updated our community on the opportunity:

So where does Star stand now? The patent infringement suit against big tobacco is gone for a paltry [$5M] settlement. I have to admit that one scared me a little. These are companies that have tens of billions in discretionary funds at their disposal to make irritants like Star go away forever. [$500M]? Chicken feed. So the fact that Star was only able to chisel out [$5M] is flat out pathetic.

The low-nitrosamine tobacco products are gone as well. So now Star only has unregulated cosmetics and nutraceuticals featuring snake oil anti-inflammatory compound anatabine. ... Star can't make anywhere near enough money off anatabine as a nutraceutical to justify its valuation, and the trials they are running to supposedly garner FDA approval as a drug are fraught with misrepresentation and will likewise fail.

Just a note: Virtually every one of my Star [underperform calls] has been followed shortly afterwards by a startling gap up in share price. Of course, I closed all those red thumbs for a solid positive score. So you might want to buy up some Star shares now but keep your finger on the trigger to sell on the spike.

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

The article Why Star Scientific Is Poised to Keep Plunging originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks 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 Motley Fool has a disclosure policy.

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