Thursday'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 Thursday:


Closing Price

CAPS Rating (5 max)

% Change

52-Week Range

Neurocrine Biosciences (NASDAQ:NBIX)





Select Comfort (NASDAQ:SCSS)





Plantronics (NYSE:PLT)





Modine Manufacturing (NYSE:MOD)





Harry Winston Diamond (NYSE:HWD)


Not rated



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 77,000-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 believe that some may be worth shorting.

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

We begin with Plantronics, which was downgraded by All-Star analyst JPMorgan after channel checks suggested significant gains by competitors.

And not just any competitors: Nokia (NYSE: NOK  ) and Motorola (NYSE: MOT  ) appear to be absorbing shelf space that major retailers once reserved for Plantronics' own headsets. Ouch.

Next up is Select Comfort, which once again startled sleep-deprived investors with disappointing guidance. Quoting from management's recently filed business update:

While sales trends continued to improve through and including Black Friday, they remained below expectations and have since softened at a time when we had projected continued improvement ... Our current outlook is that sales and profits will fall short of our previous guidance. [Emphasis added.]

Sadly, this isn't a new story for Select Comfort, which, to some, is a frightening thought. One shareholder I know counters by pointing to the firm's outstanding cash flow. He's right; this Motley Fool Hidden Gems pick is an almost ATM-like cash machine.

But can that last when margins are tightening and sales growth is slowing? Color me doubtful.

But our winner is Harry Winston Diamond, which cut its dividend by 80% after a $40.6 million charge related to Canadian exchange rates torpedoed third-quarter results. (Harry Winston is based in Toronto.)

Excluding the aberration, the company earned $0.57 a share in Q3, easily besting last year's $0.32. So why the dividend cut? Turns out that's a more complicated matter.

Harry Winston is 40% owner of the Diavik diamond mine in Canada. Management says that expanding that mine offers an interesting growth opportunity that it intends to seize. Trouble is, the bill for that project exceeds $300 million -- $218 million of which Harry Winston will pay over the next two years.

Bye-bye $0.25-per-share dividend -- hello $0.05-per-share dividend. Capital is needed elsewhere.

On principle, I have no trouble with this move. Management should seize growth opportunities as they appear. What I don't like is the suddenness of the cut. Management has been anticipating the need for additional investment at Diavik since at least April, according to the firm's 40-F filing from back then. Why not warn shareholders sooner, sirs?

Harry Winston and its rug-pulling management team ... Thursday'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 next week with more stock horror stories.

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10/27/2016 10:43 AM
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