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

Novacea (NASDAQ:NOVC)

$2.89

*

(59.81%)

$2.21 - $17.25

Favrille (NASDAQ:FVRL)

$2.42

*

(14.49%)

$2.39 - $5.15

Midway Games (NYSE:MWY)

$2.34

*

(13.01%)

$2.28 - $9.18

Mentor Graphics (NASDAQ:MENT)

$13.39

**

(12.25%)

$10.85 - $19.36

Building Materials (NYSE:BLG)

$6.41

**

(9.72%)

$6.37 - $27.04

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 gets much love from our 73,000-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 even be worth shorting.

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

Worse
We begin with Midway Games, which yesterday reported larger losses on higher revenue. I'd love to tell you that its poor earnings weren't reflected in cash flow, but I can't do that: Midway didn't publish a cash flow statement.

The balance sheet isn't too encouraging, though. Cash and equivalents fell from $73.4 million in December to $31.1 million as of Sept. 30.

Worse, Midway reported earlier last month that sales of its newest game, BlackSite: Area 51, weren't meeting expectations.

Yet some Fools saw this haircut coming. Here's a pitch from CAPS investor Bloodwingbx from mid-October:

In terms of games they have more garbage than the Staten Island landfill. [Its] biggest debut in a long time (Stranglehold) is rife with mediocrity in a genre of games full of competition. Hour of Victory, a WW II shooter (as if there were not enough of these), looks as if my eight-year-old niece designed it. The controls are horrible, the AI is non-existent (enemies shoot into walls no where in your direction). This title may not even cover the costs of producing it ... Midway will be a bust and join their old school rival Atari (Nasdaq: ATAR  ) on the bottom if they do not come up with a new franchise title that can keep people interested.

Sounds promising ... if you like losing money.

Worser
Next up is Novacea, which ended its phase 3 trial for ASCENT-2, a treatment for prostate cancer that was to be co-marketed with Schering-Plough (NYSE: SGP  ) . ASCENT-2 failed to show improvement over standard care for patients.

To be fair, Novacea seems to be genuinely hurt by the results, and for all the right reasons. Quoting CEO John Walker from the press release:

The safety of the patients in our trials is our top concern. As such, Novacea and Schering-Plough have decided to end the ASCENT-2 trial, however, the product development alliance will continue. The findings ... are extremely surprising and disappointing to us ...

Yet Novacea still makes our list. Here's why:

Trailing 12 Months 

2006

2005

2004

Return on Capital

(51.1%)

(38.1%)

(33.5%)

(21.6%)

Source: Capital IQ, a division of Standard & Poor's.

It's one thing to be unsuccessful with a drug. That happens. It's another to be unsuccessful and destroy increasing amounts of shareholder capital in the effort.

Worst
But our winner is Building Materials, whose awful third-quarter results can't simply be explained away by the subprime crisis, as Foolish colleague David Lee Smith writes here.

And it gets worse. Activist shareholder Robert Chapman has been pushing for the ouster of CEO Robert Mellor for unreasonably high levels of compensation. I agree. Mellor, who earned a bit more than $2 million in 2004, took home more than $6 million in 2006.

With such an astronomical raise, you'd think that returns on capital would have skyrocketed. Instead, they declined sharply -- to 4% over the trailing 12 months.

Go get 'em, Mr. Chapman.

Building Materials and its less-than-accountable CEO Robert Mellor ... 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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