Friday'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 Friday:

Company

Closing Price

CAPS Rating
(5 max)

%
Change

52-Week
Range

Clearwire (NASDAQ:CLWR)

$13.49

**

(15.79%)

$12.81-$35.41

Unica (NASDAQ:UNCA)

$9.28

*

(13.75%)

$9.09-$17.98

Steak n Shake (NYSE:SNS)

$11.15

*

(13.50%)

$11.07-$18.10

Fleetwood Enterprises (NYSE:FLE)

$7.56

*

(11.16%)

$7.11-$11.41

B+H Ocean Carriers (AMEX:BHO)

$14.03

**

(9.01%)

$12.09-$20.40

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 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 don't believe any of these stocks are worth owning, and believe that some may be worth shorting.

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

Worse
We begin with marketing software specialist Unica, which was downgraded by analysts at Wachovia for, among other things, failing to pay its share of state sales taxes. Quoting from Unica's press release:

... The company has under-provided for state sales tax liabilities and may have not fully recorded related receivables, in each case primarily in prior years. The company is currently assessing the liability in each state jurisdiction ... the company has not determined whether it will be required to restate prior period results related to the state sales tax liability. [Emphasis added.]

Terrific. I make sure all my stocks are being pursued by the tax man. It's the surest way to earn great returns. If, that is, you live in the Twilight Zone.

Worser
Next up is restaurateur Steak n Shake, which reached a new three-year low with a 13.5% drop on Friday, ruining the warm goodness that had otherwise satisfied the comfort food crowd.

But that's understandable. After market close on Thursday, Steak n Shake said that same-store sales at company-owned locations declined by 3.9% in its fiscal fourth quarter. Net income fell 80% over the same period. And gross margin dipped by 3.5 percentage points to 23.1%.

Why not just serve the steak in the shake? It'd taste better.

Yet no one should be surprised by these mouth-puckering results. Returns on capital and equity have been dropping for years:

Metrics

Trailing Twelve Months

2006

2005

2004

Return on capital

5.5%

7.3%

8.8%

8.9%

Return on equity

6.1%

10.4%

12.8%

13.6%

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

Worst
But our winner is RV manufacturer Fleetwood Enterprises, which was down for reasons not reported as of Friday's close.

Of course, it got interesting after the close. Here's a snippet from the 8-K that management filed just after 7 p.m. EST, which -- surprise! -- redefines the benefits available to executives following a change in control:

The new change in control agreement replaces the existing arrangements for all officers ... and provides for those officers who sign it ... a payment of two times salary plus targeted bonus in the event of a termination or constructive termination following a change in control. [Emphasis added.]

I know what you're thinking: what had they been promised before? Good question. Turn with me to page 24 of the most recent proxy statement. Here, under "Employment and Severance Agreements," is your answer:

The employment agreements of our named executive officers include or incorporate change in control agreements ... Boyd R. Plowman, our CFO, is entitled to receive two years' salary on termination without cause, and each of the other named executives is entitled to receive one year's salary on termination without cause. [Emphasis added.]

Shameful.

But let's be honest: there wasn't much to like about Fleetwood to begin with. Here's how CAPS All-Star lebelecker panned the stock over the summer:

[It has] crawled back from the abyss with a restructuring of upper management and seems to be trying to get back to core business. But they are dependent on gas prices and continued trend of retiring boomers taking to road ... Market prospects veeerry shaky.

Recent guidance from former "worst stock" and peer Monaco Coach (NYSE: MNC  ) bears witness to his take. Only the mighty Thor Industries (NYSE: THO  ) stands tall in this crowd of stock market shrimps.

Fleetwood Enterprises and its let's-see-if-we-can-sneak-this-through-when-no-one-is-looking management team ... Friday'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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