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

Dycom Industries (NYSE:DY)

$15.30

***

(34.36%)

$15.00-$34.13

NxStage Medical (NASDAQ:NXTM)

$8.49

*

(33.41%)

$8.01-$15.61

MasTec (NYSE:MTZ)

$7.12

**

(16.24%)

$6.96-$16.25

Masco (NYSE:MAS)

$19.37

**

(10.98%)

$17.92-$32.12

First Solar (NASDAQ:FSLR)

$175.56

**

(7.42%)

$33.00-$283.00

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

Naughty?
Well, OK, we can't exactly call these stocks naughty. There are days when five-star winners and Fool newsletter recommendations appear here.

But if you're an investor, you'll have plenty of bad days. The trick is to avoid dating -- or, worse, marrying -- your losers. That's why I listen when our 83,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch. You should listen, too.

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

Worse
We begin with First Solar, which had an awful Tuesday for no particular reason but is rallying big today, thanks to a very strong earnings report.

Actually, that may be understating it. First Solar managed a sixfold improvement in per-share net income, from $0.12 to $0.77. That's almost enough to make Rule Breakers pick Suntech Power (NYSE: STP  ) look like a laggard.

So why mention the stock here? Because even with blockbuster results, some valuations just don't make sense. Using the new numbers, that's what we have with First Solar, which, as I write, sports an astronomical -- and, by some accounts, unsustainable -- price-to-sales ratio of 34.

Worser
Next up is Dycom Industries, which fell well short of its own November earnings projections.

What's "well short" mean? Dycom, which is a specialty contractor in that it buries cables for utilities, told investors on Nov. 19 that it would earn at least $0.14 to $0.16 per share in its second quarter on a non-GAAP basis. Management yesterday revised that estimate to between $0.03 and $0.04 a share.

Lower revenue was partly responsible for the shortfall, but compressed margins are what really hurt the business. A company statement said that because of "the pace of January's unexpected revenue decline, costs of earned revenues were difficult to reduce meaningfully during the quarter and consequently gross margin was negatively affected." (Emphasis added.)

Lower revenue. Declining margins. I'll pass, thanks. 

Worst
But our winner is NxStage Medical, which admitted during yesterday's conference call with investors and analysts that it would once again lose money in 2008 and that it needs cash. Quoting CEO Jeff Burbank: "As we build our models looking at the next few years, these revised assumptions, and timing of cost reductions, and increased R&D spending, led us to believe we will need additional capital to fully fund our business model. We expect it to be in the range of $20 million to $40 million, and we'll be evaluating the best way to raise this capital." (Emphasis added.)

Suuuuure you will.

Not to be harsh, but this is the management team that diluted existing investors' interests by more than 300% in NxStage's first year as a public entity in 2006 and by another 26% last year. Seems to me that only the terminally stupid would assume that more dilution isn't forthcoming.

NxStage Medical and the serial diluters occupying its boardroom ... 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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