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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:


Closing Price

CAPS Rating (5 max)

% Change

52-Week Range

WellPoint (NYSE: WLP  )





Superior Well Services (Nasdaq: SWSI  )





Build-A-Bear Workshop (NYSE: BBW  )





Standard Motor Products (NYSE: SMP  )





Sprint Nextel (NYSE: S  )





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

Well, OK, we can't exactly call these stocks naughty. There are days when five-star winners or newsletter recommendations appear here, and today's one of them.

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 86,000-person-strong Motley Fool CAPS community of stock pickers chimes in with a poor rating or a negative pitch. You should, too. Here's today's list of the world's worst stocks.

We begin with Build-A-Bear, which completed its review of strategic alternatives and found that its best (only?) course of action is to repurchase as much as $50 million in stock. Quoting CEO Maxine Clark from a company statement:

Our Company had net profits of $23.5 million in 2007, has strong cash flow, and a flexible capital structure, and we believe that an expanded share repurchase program at this time is an excellent use of our capital resources. The Board's decision to increase our share repurchase program is a testament to our confidence and optimism in the strength of our business model and our commitment to increase shareholder value.

That's not a bad conclusion. Trouble is, I have a hard time believing that Build-A-Bear, which analysts only expect to grow earnings by 5% over the next five years, is cheap.

I've a better idea, Ms. Clark. Save half of that $50 million for capital improvements and growth initiatives, and return the rest to shareholders via a special dividend. A $25 million distribution would come to $1.23 a share.

Next up is Standard Motor Products, which badly missed estimates in reporting a fourth-quarter loss.

The numbers were awful. Restructuring expenses were up sevenfold, resulting in a $0.43-per-share loss. The Street had expected Standard Motor to earn $0.08 per share from continuing operations.

But the news is actually worse than that. Lower-than-expected revenue resulted from returns from big customers such as Advance Auto Parts (NYSE: AAP  ) and O'Reilly Automotive (Nasdaq: ORLY  ) . Quoting CEO Lawrence Sills from a company statement:

There were two main components of these returns. First were heavy returns from key accounts, as many in the distribution channel looked to reduce their stock levels going into 2008. Second, were returns generated as we implemented a brand change for two major customers. [Emphasis added.]

Translation: It may be a while before orders reach the levels you're used to seeing.

But our winner is WellPoint, which lowered its member forecast for the second time and lowered its 2008 outlook for per-share earnings from $6.41 per share to $5.76 to $6.01. At best, that's a 6% cut.

Member statistics are even less encouraging. WellPoint now says it expects to have 35.3 million members in its various Blue Cross/Blue Shield plans by the end of 2008, lowered from 35.6 million in late January, and down a further 200,000 from an earlier estimate, Reuters reports.

CEO Angela Braly copped to the gaffes in a conference call with analysts, saying WellPoint had "missed trends." But is that really all that's at work here? One missed forecast is a gaffe. Two?

Six weeks ago, executives stood by a forecast that WellPoint's benefit expense ratio would top out at 81.6. Yesterday, management said that ratio -- which compares income to administrative expenses -- could rise to 83.1 this year. A rising ratio suggests inefficiency, and thereby, lower profits.

WellPoint and its obviously cracked crystal ball ... 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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