Is Palm a Poor Stock?

In The Motley Fool's 135,000-member CAPS community, stocks are rated on a scale of one to five stars, based on member ratings. One-star ratings are the CAPS' equivalent of a flashing red warning beacon.

Palm (Nasdaq: PALM), known originally for its Palm Pilot and later its Treo, sports that dreaded one-star rating. Although the company was an awe-inspiring pioneer of the mobile technology market during the Internet boom, it fell on hard times after the bubble burst. It has since found itself on the losing end of competition with foes such as Research In Motion and Apple.

Since December, Palm's stock has absolutely been on fire, multiplying in value more than eight times. The CAPS community, however, has not budged from its one-star rating. So what gives?

Well, CAPS member "SpoilsofWar" gave the stock a thumbs-down, saying that the company is "running on fumes even if the Pre (phone) is a hit." Member "SBeren" suggested that consumers will find the Pre too expensive compared with competitor offerings. Member "fmahnke" said that the stock's valuation "defies belief." More bullish, member "SreeRama" praised the company's product pipeline and management, and suggested that the company might be an acquisition target.

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