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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:


Closing Price

CAPS Rating (out of 5)

% Change

52-Week Range

Human Genome Sciences (NASDAQ:HGSI)





First Cash Financial (NASDAQ:FCFS)





Motorola (NYSE:MOT)










Hoku Scientific (NASDAQ:HOKU)





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

Well, OK, we can't exactly call these stocks naughty. We've had stocks that rate four, and even five, stars in this column in the not-too-distant past, and we have another today.

But, as Huey Lewis says, bad is bad. And when our 82,000-person-strong Motley Fool CAPS community of amateur and professional stock pickers speaks with a poor rating, or a negative pitch, I listen. You should too.

Thus, here is today's list of the worst stocks in the world.

We begin with Motorola, which reported an 84% decline in fourth-quarter earnings. But you need to know the context to understand why Motorola makes our list.

Earlier today, Nokia (NYSE: NOK  ) reported a 44% gain on the bottom line in its fourth quarter and said that its share of the mobile handset market had reached 40% worldwide. Motorola, as of late last year, had seen its share dip to 13% from 23% in the year prior.

Translation: Macroeconomic factors aren't the problem. Better-performing competition is.

Next up is Hoku Scientific, which offered fourth-quarter revenue guidance well below Street estimates and warned of profit pressure due to higher costs. Quoting from a company statement:

Based on its current outlook, the Company expects revenue for the fourth quarter ending March 31, 2008 to be in the range of $600,000 to $1.2 million. In addition, the Company expects that it will need to increase its efforts in supporting a polysilicon manufacturing and PV systems installation service business, develop its products and expand its corporate infrastructure. As a result the Company expects its costs to continue to increase significantly and expects to continue to incur losses for the foreseeable future ... [Emphasis added.]

I'd be more forgiving here if Hoku had a history of improving margins and returns on capital (ROC). Sadly, it's the opposite. Gross margin is down to 28.5% over the trailing 12 months from 84.4% in 2005. Worse, Hoku produced positive ROC just once during that same period.

But our winner is Human Genome Sciences, which revealed that patients exposed to higher dosages of its experimental hepatitis-C drug Albuferon were suffering serious lung-related side effects from regular treatment. Albuferon has been in phase 3 clinical trials.

What to do? HGS is following the advice of an independent monitoring committee to lower the dosage, which should, in theory, prevent side effects.

Here's the problem -- and why Human Genome Sciences takes our prize: This isn't the first time this company has goofed up in a phase 2 trial. During 2003, a treatment for venous ulcers, although proven safe, did little to help patients.

Why is anyone surprised, then, that HGS is having trouble with Albuferon? Small-f fool my genes once, shame on you. Do it twice and ... oh, well, you know.

Human Genome Sciences and its trust-us-we-won't-hurt-you drug-development team ...

Wednesday'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 with more stock horror stories.

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12/31/1969 7:00 PM
HGSI.DL $0.00 Down +0.00 +0.00%
Human Genome Scien… CAPS Rating: **
HOKUQ $0.00 Up +0.00 +0.00%
Hoku Scientific, I… CAPS Rating: No stars
MSI $69.40 Up +0.05 +0.07%
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CNH $0.00 Down +0.00 +0.00%
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First Cash Financi… CAPS Rating: *****
NOK $5.60 Up +0.02 +0.36%
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