2-Star Stocks Poised to Plunge: Research In Motion?
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.
|Headquarters (Founded)||Waterloo, Canada (1984)|
|Market Cap||$7.2 billion|
|Trailing-12-Month Revenue||$19.8 billion|
|Management||Chairman/Co-CEO James Balsillie|
Co-Founder/Co-CEO Michael Lazaridis
|Return on Equity (Average, Past 3 Years)||34.9%|
|Cash/Debt||$1.3 billion / $0|
|Competitors||Apple (NAS: AAPL) |
Google (NAS: GOOG)
Microsoft (NAS: MSFT)
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 21% of the 5,699 members who have rated RIM believe the stock will underperform the S&P 500 going forward. These bears include MajorBob04 and georcole, both of whom are ranked in the top 1% of our community.
Just last month, MajorBob04 succinctly summed up the RIM bear case: "Still not clear where the growth will come from, or even maintaining the current revenue and earnings. Based on recent problems, I expect many people to switch to other cell phones, smartphones, etc."
Over the next five years, in fact, RIM's bottom line is expected to decline 2% annually. Meanwhile, rivals Apple, Microsoft, and Google are expected to grow their earnings at a rate of 19%, 10%, and 19%, respectively.
CAPS All-Star georcole expands on the underperform argument:
Is there any valid reason to believe that I should've given it a green thumb? I cannot think of one. They are losing market share steadily with no hope of getting it back. They are such a closed system that other companies cannot use their OS. That may work for Apple, but it is no longer working for [Research In Motion]. They had a great ride, but the ride is slowing down. They may hang in there for a while, but it is going to take something really incredible to bring their stock back up in a meaningful way. Good luck [Research In Motion], but I do not think it will help.
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!
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Microsoft, as well as creating a bull call spread position in Apple and Microsoft. 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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