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:

Company

Closing Price

CAPS Rating

(5 max)

Change

52-Week

Range

AllScripts (NASDAQ:MDRX)

$11.27

***

(26.77%)

$10.76-$29.00

Build-A-Bear Workshop (NYSE:BBW)

$10.34

**

(20.46%)

$9.40-$31.50

Liz Claiborne (NYSE:LIZ)

$18.31

**

(18.37%)

$16.05-$46.84

Thomson (NYSE:TMS)

$10.09

*

(15.99%)

$9.87-$20.24

Thomas Weisel Partners (NASDAQ:TWPG)

$9.60

***

(12.25%)

$9.57-$21.05

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 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, too.

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

Worse
We begin with Build-A-Bear Workshop, which got the stuffing beat out of it after reporting awful earnings yesterday. And I do mean awful. Here's how Foolish colleague Rick Munarriz put it:

Revenue climbed just 3% higher to $147.4 million for the quarter that fell during the holiday season, despite heady expansion both here and abroad. Profits fell to $0.48 a share, well off the $0.75 it earned a year ago and the $0.66 that jaded analysts were expecting.

Some weren't so small-f fooled. CAPS investor ethanbryson panned the stock with a nice turn of phrase in a January pitch, "Overpriced ... only works well in a bull market. Why would anyone invest in a bear market during a bear market anyway?"

Laugh all you want, but, apparently, Build-A-Bear executives are asking the same question. The company will open only 20 new stores in North America this year, or roughly half its historic rate of expansion.

Bye-bye, growth story.

Worser
Next up is makeup maven Liz Claiborne, whose fourth-quarter earnings preview revealed a Grand Canyon-sized miss. Liz now expects to earn between $0.15 and $0.25 in adjusted earnings. Analysts were expecting $0.63.

Either Liz is a tease or analysts are just plain wrong, right?

Maybe. My concern is how far Liz has fallen. Last year, she booked $0.94 in per-share earnings. That's a minimum 73% decline before accounting for even one penny of restructuring and other one-time charges, of which there were many. (Including one-timers, Liz expects to lose $0.90 to $1.00 per share in the fourth quarter.)

Finally, let's talk business quality. Moody's apparently doesn't see much to admire. This morning, the ratings agency hinted at a pending downgrade of Liz Claiborne's debt. Were that to occur it would increase the company's cost to acquire fresh capital and, perhaps, impede growth.

Worst
But our winner is AllScripts, which, like primary rival Quality Systems (Nasdaq: QSII  ) , has kept strong and mostly growing margins over the past few years.

No longer. Fourth-quarter gross margin declined more than four percentage points year over year.

But the decline itself isn't the biggest problem. It's what caused the decline: a new version of its TouchWorks health-care software suite. Here's how CEO Glen Tullman put it in comments to analysts and investors in a conference call yesterday:

However, the much anticipated release added unexpected delays, which have had both a timeline and a bottom-line impact. Simply stated, given the flexibility and the breadth of the software it has taken more time for our people and for our clients to learn it and to configure it. In addition, we have had our share of clean-up that comes with any undertaking of this size.  

I applaud Tullman's honesty but, sorry, new software releases are supposed to bring pricing power and, thereby, higher margins. Of course, that only occurs when managers and staff execute as they're supposed to.

Whoops.

AllScripts and its margin-eating software suite ... 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 Wednesday with more stock horror stories.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 579272, ~/Articles/ArticleHandler.aspx, 8/1/2014 8:39:06 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement