Monday's Worst Stocks in the World

Bad days. We all have them; some of us deserve them.

Here are five stocks whose naughty ways drew investors' scorn on Monday:

Company

Closing Price

CAPS Rating
(out of 5)

% Change

52-Week Range

HSW International (NASDAQ:HSWI)

$7.44

**

(23.93%)

$5.00-$11.48

PRIMEDIA (NYSE:PRM)

$10.95

*

(17.11%)

$8.88-$20.40

Cardica (NASDAQ:CRDC)

$11.44

**

(13.33%)

$3.95-$15.15

LaBranche & Co. (NYSE:LAB)

$5.12

*

(11.72%)

$4.28-$12.21

Lakeland Financial (NASDAQ:LKFN)

$21.97

**

(10.00%)

$20.05-$26.40

Sources: The Wall Street Journal, Yahoo! Finance, Motley Fool CAPS.

Naughty?
Well, OK, we can't exactly call these stocks naughty. But none of them get much love from our 65,000-person-strong Motley Fool CAPS community of amateur and professional stock pickers.

To the contrary -- when it comes to these stocks, CAPS investors have gone thumbs-down more often than film critic Roger Ebert. They don't believe any of these stocks are worth owning, and they think some may be worth shorting.

Which of today's candidates is worst? Read on, dear Fool.

Bad
We begin with PRIMEDIA, which said that its 2007 results would be affected by the subprime crisis.

Why? PRIMEDIA is a primary distributor of apartment and real estate advertising circulars. With fewer houses for sale and fewer new housing developments, double-digit growth isn't exactly on the horizon. And it may not be for some time.

Worse
Next up is HSW International, which suffered a crew cut from investors when its majority shareholder -- HowStuffWorks, owner of the highly popular howstuffworks.com website -- agreed to sell to Discovery Holding (Nasdaq: DISCA  ) for an undisclosed sum.

But is this really so bad? HSW says that it gets to keep rights to HowStuffWorks content for Brazil and China and, in a press release, speculates that a deal covering Russia and India could be in the works.

Discovery's equivalent press release makes no such speculation. What if no deal is in the offing? That leaves HSW with distribution rights for Brazil and China and a fledgling business formerly known as INTAC, which, according to HSW's prospectus:

Services the education and career development markets in China with software for school administration and consumer-focused websites, and distributes wireless handsets to equipment wholesalers, agents, retailers and other distributors, mainly in Hong Kong.

Talk about spicy. China. Wireless. Websites. Just how much revenue did this buzzword-compliant business produce in 2006? $10 million? $100 million? How about zero?

No wonder investors are running for the exits.

Worst
But our "winner" is medical device maker Cardica, which has filed to sell up to $40 million in stock for itself and 2.58 million shares on behalf of its largest stockholder. And that's on top of a Friday announcement in which the company's board of directors handed out 40,000 more shares to its vice president of sales and marketing.

Dilution, thy name is Cardica.

But dilution alone isn't why Cardica makes our list. It's the spin that bothers me. Let's the look at the reasoning for the offering. Quoting from the prospectus for the filing:

We currently intend to use the net proceeds from sales of common stock offered by us for general corporate purposes, which may include research and development and repayment of indebtedness outstanding from time to time. We may also use a portion of the net proceeds to acquire or invest in businesses, products and technologies that are complementary to our own, although we currently are not planning or negotiating any such transactions.

Translation: "We'll use it however we freaking want to, bucko."

Actually, a better translation might be: "Because we've been tossing cash into a bonfire at HQ and we'd rather not turn to the credit markets right now."

Free cash flow has dropped to negative $15.8 million from negative $9.5 million over the last fiscal year. And yet with $23 million in the bank versus just $2 million in net debt, Cardica isn't in any immediate danger of going broke.

Cardica and its take-the-money-and-run management team ... Monday's worst stock in the CAPS world.

Do you agree? Disagree? Let us know what you think by signing up for CAPS today. It's 100% free to participate.

See you back here tomorrow for more stock horror stories.


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