Tuesday'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 Tuesday:

Naughty?
Well, OK, I can't exactly call these stocks naughty. But none of them get much love from our 72,000-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 are worth owning, and that some might be worth shorting.

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

Worse
We begin with Qwest, which reported decent third-quarter results but, in doing so, overstated its progress. Quoting new CEO Ed Mueller from the press release:

The quarter's operating results were enhanced by significant milestones that solidified our opportunity for ongoing growth and value creation. The settlement of remaining opt-out shareholder litigation matters is a significant step in putting uncertainties behind us, and the accounting recognition of the value of tax assets indicates confidence in our future profitability. [Emphasis added.]

What Mueller is referring to is a one-time tax benefit worth $2.2 billion. While he's right that Qwest's ability to recognize this asset is a good thing, it's anything but a perfect indicator of future profitability or business success.

And it's not like Qwest is growing. Revenue was down 1.5% during the quarter.

Worser
Next up is American Medical Systems, which reported Q3 earnings below Street estimates and cut its 2007 guidance for the fourth time in 10 months, Forbes reports.

Is management in over its head? CAPS investor vcbthornton explains:

This company is in a business that is likely to grow with an aging population -- urinary incontinence treatments. My main reason for rating it as underperforming is its recent acquisition of Laserscope. Cosmetic laser treatments are a bit outside their expertise, and there is quite a bit of competition in that field. Plus, profits on its core business haven't been so good of late.

She wrote that in January. The stock has come down more than 37% since then.

Worst
But our winner is Pacific Capital, which was forced to cut its guidance because of a $22.4 million loss provision on a different sort of liar loan. Pacific Capital, you see, has a habit of lending to those who anticipate big tax refunds from the IRS.

Turns out some borrowers who anticipated big refunds didn't get them. Now they're being pursued for fraud and won't be able to repay Pacific, the Associated Press reports. (I'm shocked. Shocked!)

It gets worse! This is the second time this year Pacific has revised its loss provision for these so-called "refund anticipation" loans. For Q3, the added losses could cut earnings by as much as $0.27 a share.

Pacific Capital and its who-needs-due-diligence-when-you-have-the-IRS makes it Tuesday'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.

I'll be back tomorrow with more stock horror stories.