The CAPS Screen: Avoid These 5 Financial Time Bombs

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. As financial disasters Washington Mutual (NYSE: WM) and E*Trade Financial (Nasdaq: ETFC) illustrate, companies often get punished for all the right reasons. And in those cases, their plight can be as bad as you think, and worse.

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're also:

• Capitalized at more than $200 million.
• Down at least 25% over the past year.
• Rated one star, the lowest possible rank out of five, 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 (in billions)
Capital One (NYSE: COF)	$35.70	$13.4
National City (NYSE: NCC)	$3.77	$2.9
Regions Financial (NYSE: RF)	$7.13	$5.0
UBS (NYSE: UBS)	$18.64	$40.4
Wachovia (NYSE: WB)	$9.84	$19.6

Data from Motley Fool CAPS and Yahoo! Finance as of July 14.

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 110,000-strong (and counting) CAPS community wants to hear your opinion.

Copyright © 2008 Universal Press Syndicate.