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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:


Closing Price

CAPS Rating (out of 5)

% Change

52-Week Range

E*Trade Financial (NASDAQ:ETFC)





Fuwei Films (NASDAQ:FFHL)





EchoStar Communications (NASDAQ:DISH)





Todd Shipyards (NYSE:TOD)





Verasun Energy (NYSE:VSE)





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

Well, OK, we can't exactly call these stocks naughty. But none of them gets much love from our 74,000-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 think none of these stocks is worth owning and that some may even be worth shorting.

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

We begin with VeraSun Energy, which, like peer Aventine Renewable Energy (NYSE: AVR  ) , got a downgrade yesterday from Lehman Brothers, one of the best of the best on Wall Street in CAPS.

The reason? Oil. Crude prices fell sharply Monday, leading investors to get rid of renewable-energy stocks. Ethanol producers such as VeraSun, Aventine, and Pacific Ethanol (Nasdaq: PEIX  ) were among their favorite castoffs.

But investors should have been selling VeraSun months ago. Witness its returns on capital, which declined over the past year, just as oil prices reached record highs:

Return on Capital

Trailing 12 Months







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

Where were you a year ago, Lehman?

Next up is consumer packaging specialist Fuwei Films, a three-star stock in CAPS. Three-star stocks don't typically make this list -- there are usually enough snorting bulls to drown out the snarling bears -- but Fuwei is special. Here's why.

First, Chinese authorities are seeking the arrest of three of its largest shareholders. One, Tongju Zhou, had been a member of Fuwei's compensation committee before resigning on Oct. 25.

Second, Fuwei says that, as a result of the criminal probe, its independent accountant has resigned.

Third, because it has lost two independent directors, the company is now out of compliance with Nasdaq National Market listing rules.

Fourth and finally -- and perhaps worst of all -- Fuwei told investors in reporting mediocre third-quarter results yesterday that it would have to seek additional capital to grow its business. Quoting:

The total investment budget for our Third Production Line has been adjusted to the $35 million range, resulting in a capital shortfall of approximately $15 million. ... We have been unable to find sufficient sources of financing on satisfactory terms. ... As a result, the Third Production Line has been delayed. Upon the availability of funds, the Company estimates it will take five to six months before the Third Production Line commences operation.

You don't need me to say any more, do you?

Moving on.

Today's winner is bank and broker E*Trade Financial, which suffered the indignity of bankruptcy fears thanks to a note published by a Citigroup analyst yesterday morning.

That may well prove akin to screaming "fire!" in a crowded theater. But I'm not so sure. I'm far more inclined to agree with my Foolish colleague Seth Jayson, who has been spot-on in calling the housing bust. He says investors have more to fear. Hang on whilst I hand him the mic ... (feel free to insert your own sound effects here).

Ready? Here we go:

In its quest for growth, E*Trade put far too much of its asset base into residential real estate loans or related derivatives -- at the top of a since-crumbled market. (Last Friday's 10-Q shows that, at current estimates of fair value, 72% of E*Trade's $16.6 billion in available-for-sale securities are mortgage-backed.) ... Bad move. Terrible move.

Deadly move? Could be, yes. Because here's the thing: E*Trade's brokerage business is still thriving. Imagine if that changes. Now imagine that its banking business suffers as others have. Where's the margin of safety for investors then? Would there be any?

E*Trade Financial and its rotting investment portfolio ... 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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Related Tickers

10/21/2016 4:00 PM
ETFC $29.50 Up +1.30 +4.61%
E*TRADE Financial… CAPS Rating: ***
VSE $0.28 Down +0.00 +0.00%
VeraSun Energy CAPS Rating: *
AVR $0.09 Down +0.00 +0.00%
Aventine Renewable… CAPS Rating: *
DISH $57.40 Down -1.78 -3.01%
DISH Network CAPS Rating: **
TOD.DL $0.00 Down +0.00 +0.00%
Todd Shipyards Cor… CAPS Rating: *****