The CAPS Screen: Stay Away From These 10 Financial Time Bombs

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.

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%.

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.