By Ilan Moscovitz:
Sift through the wreckage of beaten-down companies and you'll likely find a few wonderful stocks. Lately, the stock market has blessed patient investors with plenty of thrashed financial companies.
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But the savviest investors know that willy-nilly contrarianism isn't a sure path to riches. Often, companies get punished for all the right reasons. And in those cases, it can be so much worse than you think.
With that in mind, I used our new Motley Fool CAPS screening tool to find beaten-down financial stocks the online CAPS community loves to hate. These are the stocks CAPS players avoid like the plague.
They are also:
- Capitalized at more than $200 million.
- Down at least 25% over the past year
- Rated one star, the lowest possible, by our CAPS community.
Remember, in the first year for which we have data, one-star companies flamed out with an average loss of nearly 17%.
| Company | Share Price | Market Cap |
|---|---|---|
| Alesco Financial | $3.45 | $205 million |
| Ambac (NYSE: ABK) | $4.63 | $1.3 billion |
| Capital One (NYSE: COF) | $53.00 | $19.9 billion |
| Downey Financial | $14.14 | $394 million |
| Fannie Mae (NYSE: FNM) | $28.30 | $27.7 billion |
| Freddie Mac | $24.91 | $16.1 billion |
| IndyMac (NYSE: IMB) | $3.25 | $263 million |
| Lehman Brothers (NYSE: LEH) | $44.24 | $24.5 billion |
| National City (NYSE: NCC) | $6.30 | $4.0 billion |
| UBS (NYSE: UBS) | $33.59 | $64.3 billion |
Data from Motley Fool CAPS and Yahoo! Finance as of April 30.
Are these companies poised for a turnaround? Or is the pain just beginning? Come and join us at CAPS to let us know what you think. Our 100,000-strong (and counting) CAPS community wants to hear your opinion.