1-Star Stocks Poised to Plunge: Capital One?

November 16, 2009 4:41 AM ET

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Stocks mentioned in this article: American Express Co (AXP) Stock Quote, Chart, News, Add to Watchlist; Capital One Financial Corp (COF) Stock Quote, Chart, News, Add to Watchlist; General Electric Co (GE) Stock Quote, Chart, News, Add to Watchlist; Goldman Sachs Group Inc (GS) Stock Quote, Chart, News, Add to Watchlist; MasterCard Inc (MA) Stock Quote, Chart, News, Add to Watchlist; Visa Inc (V) Stock Quote, Chart, News, Add to Watchlist

Brian D. Pacampara

Based on the aggregated intelligence of 140,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, credit card company Capital One Financial (NYSE: COF) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Capital One's business and see what CAPS investors are saying about the stock right now.

Capital Onefacts

Headquarters (Founded)	McLean, Va. (1993)
Market Cap	$17.5 billion
Industry	Consumer finance
Trailing-12-Month Revenue	$7.3 billion
Management	Founder / CEO Richard Fairbank
Trailing-12-Month Return on Equity	(3%)
Year-to-Date Return	25.6%
Competitors	Visa (NYSE: V) American Express (NYSE: AXP) MasterCard (NYSE: MA)
CAPS Members Bearish on COF Also Bearish on	Goldman Sachs (NYSE: GS) Citigroup (NYSE: C)
CAPS Members Bullish on COF Also Bullish on	General Electric (NYSE: GE)

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

On CAPS, 42.2% of the 1,231 members who have rated Capital One believe the stock will underperform the S&P 500 going forward. These bears include All-Star DarthMaul09, who is ranked in the top 3% of our community, and jed71.

Less than two months ago, DarthMaul09 warned that the stock might be maxed out:

With the market going up their credit card holders were looking a little better financially. With the start of this correction, the old problem of bad debt will become news again. This stock may fall back to its 52 week low.

In a pitch from late last month, jed71 also refused to extend Capital One any credit:

[Credit card] defaults still continue to rise, reserves will have to increase substantially given foreclosures / bankruptcies have not yet reached their peak. Don't expect anymore positive surprises in the coming few quarters. ... Can anyone venture a guess how much a credit card company recovers from an unsecured loan from a debtor who is in bankruptcy? Yes, you guessed it, zero, zip, zilch, nada, absolutely nothing. If you want to take risks on bank stocks, find one that actually has a larger majority of its loans that have been securitized by hard assets.

What do you think about Capital One, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. The CAPS community is waiting to hear your opinions. CAPS is 100% free, so get started!

1-Star Stocks Poised to Plunge: Capital One?

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