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:

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

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 84,000-person-strong Motley Fool CAPS community of stock pickers speaks out with a poor rating or a negative pitch. You should, too.

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

Worse
We begin with LDK Solar, which raised questions among analysts by reporting inventory in two buckets: material expected to be used within a year, and material slated for beyond one year.

LDK chief financial officer Jack Lai told analysts who questioned the practice that it was "normal" and "not unusual at all." I doubt that. But for argument's sake, let's assume he's right. Inventory still grew three times as fast as revenue, according to the sequential numbers LDK provided -- 69.2% to 21.4%.

There isn't an accounting system in the universe under which that's a good sign.

Worser
Next up is Healthways, a Stock Advisor pick that substantially cut guidance for 2008. Executives now expect the firm to earn $1.50 to $1.55 a share on $720 million to $740 million in revenue. That's down from earlier projections of $1.77 to $1.86 a share on $782 million to $815 million in revenue.

Two things trouble me about this revision. First, it's huge. As Fool analyst and Income Investor co-advisor Andy Cross put it in a posting on the Stock Advisor boards, "Lowering guidance by 15% in just a month or so is not a way to build confidence with investors."

Second, this isn't the only time Healthways has experienced trouble. Last summer, the stock took a beating after executives finally copped to unrealistic expectations arising from its participation in the Medicare Health Support pilot program.

Worst
But our winner is Office Depot, which earned a spot on our list in December for excuse-mongering. Yesterday brought the official earnings announcement -- a lousy one -- and, once again, executives say the subprime crisis is to blame. Quoting from a company statement:

Results continue to be negatively affected by difficult housing-related economic conditions in key markets, particularly Florida and California. Combined, these two states represented 26% of total store sales and about 40% of the total comparable sales decrease in the fourth quarter. This economic weakness has spread to other U.S. retail markets with housing issues, creating additional pressure on sales and margins. [Emphasis added.]

Whether or not you believe management's "the credit crunch ate our earnings" line, this much is clear: Office Depot hasn't protected itself from a downturn in consumer spending. Which, in turn, means that if a recession really is in the offing, we've yet to see just how bad a business this can be.

Office Depot and its credit-crunched customer base ... Tuesday's Worst Stock in the CAPS world.

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I'll be back tomorrow with more stock horror stories.