Wednesday'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 Wednesday:

Naughty?
Well, OK, we can't exactly call these stocks naughty. But none of them get 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 that some may be worth shorting.

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

Worse
We begin with contractor MasTec, which issued fourth-quarter guidance well below Street expectations. But that happens from time to time. What's so special about this report? Allow me to hand the mike to D.A. Davidson, whose analysts put it this way in a research note: "Management cited the impact of third-party technicians on its DirecTV business, delayed capital spending by other customers, and margin pressures in its energy business as factors affecting current operations."

Now, ask yourself: How many of these problems does MasTec have control of? Margin pressure in energy, maybe. But everything else is on a wing and a prayer.

As Dr. Phil might say: Good luck with that.

Worser
Next up is Washington Mutual, which, though an Income Investor recommendation, yesterday became the subject of an investigation by the office of New York Attorney General Andrew Cuomo.

But that's not all. Yesterday CEO Kerry Killinger also told a gathering of investors that loan losses would continue into 2008. Quoting: "The soft landing we were anticipating previously quickly transitioned to a severe downturn."

Ouch.

Yet investors seem to be more worried about the NY probe -- and justifiably so, I'd say. Cuomo wants details of the mortgages Freddie Mac (NYSE:FRE) and Inside Value pick Fannie Mae (NYSE:FNM) bought from WaMu. The fear is that the bank's contractors unfairly inflated appraisals, which, in turn, made it easier to write loans for those who shouldn't have seen a dime. Quoting:

Our expanding investigation into the mortgage industry has uncovered that Washington Mutual improperly pressured appraisers to provide inflated values that best served the lender's interest. ... Knowing this, Fannie Mae and Freddie Mac cannot afford to continue buying Washington Mutual mortgages unless they are sure these loans are based on reliable and independent appraisals.

As if a credit crunch weren't enough? Way to go, WaMu.

Worst
But our winner is e-commerce specialist iMergent, which downplayed poor third-quarter results and failed to offer much comment on its legal woes.

More on that in a minute. First, let's review the numbers. Revenue was up 12%, yet gross margin fell from 68.3% a year ago to 63.9% in Q3. Worse, iMergent lost $0.07 a share -- down from an $0.18 per share profit a year ago -- despite significant props, including a vastly reduced share count and a $238,000 tax credit.

At least management didn't blame the subprime crisis for its woes. Oh wait, yes it did. Quoting Chief Financial Officer Robert Lewis from iMergent's press release, "Additionally, we believe the current credit crisis in the U.S. negatively affected revenue."

Yet, that's just a head fake; it's not why you're seeing iMergent lead today's list of losers. This is. Go ahead, click. What you'll find is a statement from the Australian Competition and Consumer Commission, which -- surprise! -- has filed for an injunction against iMergent. So far, one hasn't been granted, but regulators are still keeping a close eye on the business. Where was the mention of that in the press release?

For its part, management mostly proclaims innocence here, but the Aussie filing is only the latest in a very long string of similar legal actions in the U.S.

iMergent and its if-only-we-knew-how-to-do-business-without-being-served-with-a-subpeona management team ... Wednesday's worst stock in the CAPS world.

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See you back here tomorrow for more stock horror stories.