Avoid This Hot Stock

CAPS' Weekly Top Stock Idea, The Motley Fool
Updated

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Company

Polypore International (NYS: PPO)

Submitted by

Jeffrey2012

Member Rating

80.61

Submitted on

8/7/2011

Stock Price at Underperform Recommendation

$63.46

Polypore International Profile

Star Rating (out of 5)

***

Headquarters

Charlotte, N.C.

Industry

Industrial goods

Market Cap

$2.62 billion

Industry Peers

Pall (NYS: PLL)

Advanced Battery Technologies (NAS: ABAT)

A123 (NAS: AONE)

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

This week's pitch:
The company was priced for perfection and unfortunately way too many speculators were still in the stock because of the belief that the business was running on all cylinders was going to continue this for the forseeable future.

However, a good part of their business is actually internationally based in Europe and their distress there is likely to affect [Polypore] going forward.

Another reason why their stock wont be going anywhere for at least the next quarter or two is due to the fact that they have constrained production because of a factory that is not open yet. So their financials will most likely be at the same level with the very real risk of poorer performance going forward.

Also, it is a private equity pig. The company is also loaded to the hilt with debt currently at around 712 million. The very real risk of interest rate costs going forward for over leveraged companies like this will be a serious possibility adding millions more to costs going forward.

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At the time thisarticle was published The Motley Fool is investors writing for investors.Dan Dzombakdid not have a position in any of the companies mentioned in this article. Pitches must be compelling, substantive, and made in the past 30 days.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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