Tuesday'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 Tuesday:

Company

Closing Price

CAPS Rating (out of 5)

% Change

52-Week Range

Security Capital Assurance (NYSE:SCA)

$2.41

*

(23.73%)

$2.23-$34.58

Credence Systems (NASDAQ:CMOS)

$1.79

*

(20.80%)

$1.63-$5.23

SUPERVALU (NYSE:SVU)

$28.61

**

(16.56%)

$28.18-$49.78

UAL Corp (NASDAQ:UAUA)

$24.39

*

(16.42%)

$24.23-$51.60

AT&T (NYSE:T)

$39.16

****

(4.56%)

$31.94-$42.97

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 80,000-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 be worth shorting.

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

Worse
We begin with AT&T, whose CEO, Randall Stephenson, told investors at a recent conference that the telco is experiencing "softness" in its consumer business. No surprises there. Telecom is a brutal business, and well-financed cable companies, including Comcast (Nasdaq: CMCSA  ) , are hungry to take a bite out of the monopoly that once defined old Ma Bell.

Why add AT&T to today's list, then? Even though its wireless business is going well -- thanks in no small part to the iPhone -- other services, such as its IPTV offering, have been slow to market. That has to change, for there's zero reason to believe consumers who've cut the cord with Ma will ever want to return home, as it were.

Worser
Next up is grocer SUPERVALU, which reported higher third-quarter earnings on lower revenue. That's not always awful, of course. Bumps frequently occur along the road to higher sales. Here, the results are bad because they're coupled with a weakening forecast for both sales and earnings for fiscal 2008.

Management told investors in October to expect 1% to 2% gains in same-store sales for the fiscal year. One quarter later, they've cut their projections in half, to 0.5% to 1%.

My translation: We don't really know how bad it could get. But we're not likely to be selling more stuff anytime soon. Come back later.

Worst
But our winner is Credence Systems, which suffered the indignity of analyst downgrades, including one by Citigroup analyst Timothy Arcuri, who referred to Credence's plan to increase its focus on Asia as "shuffling the deck chairs" in a well-worn reference to the doomed Titanic.

Many CAPS investors appear to agree, as my Foolish colleague Brian Pacampara pointed out here earlier today. I think they've got a point. Even if you give Credence credit for turning a profit for the first time in six years, as its press release says, a closer look at the balance sheet suggests the company is walking a financial tightrope.

Here's why. Even though cash and investments were up more than $139 million, it appears that much of that was thanks to added debt and clever management of working capital. Some specifics:

  • Net debt increased by more than $45 million.
  • Reductions in accounts receivable and inventory added at least $43 million.

See the pattern here? More than 60% of Credence's liquid gains appears to come from actions that may not be repeatable. And that doesn't even consider asset reductions of about $26 million, which may account for even more of those cash gains. Credence Systems and its yet-to-be revived business model ... Tuesday'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 tomorrow with more stock horror stories.


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