Monday'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 Monday:

Company

Closing Price

CAPS Rating (out of 5)

% Change

52-Week Range

National Financial Partners (NYSE:NFP)

$17.14

**

(23.92%)

$16.87-$56.75

Boston Private Financial (NASDAQ:BPFH)

$10.31

*

(23.63%)

$10.20-$30.25

Metabolix (NASDAQ:MBLX)

$10.08

**

(18.31%)

$10.00-$29.76

Ascent Solar (NASDAQ:ASTI)

$10.37

**

(14.23%)

$6.50-$28.35

Conseco (NYSE:CNO)

$8.76

**

(12.92%)

$8.70-$21.25

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 89,000-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 world.

Worse
We begin with Ascent Solar, which on Friday after market close announced its intent to register shares for sale that, after fees, could net the firm $80 million in proceeds.

There's just one problem: Bear Stearns (NYSE: BSC  ) is the lead underwriter for the deal. Quoting from the prospectus:

Subject to the terms and conditions in an underwriting agreement among us and Bear, Stearns & Co. Inc., acting as representative of the underwriters ... If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. [Emphasis added.]

Whoops!

To be fair, the Fed is backing most Bear Stearns commitments as a condition of JPMorgan Chase's (NYSE: JPM  ) bailout of the investment banker. And an Ascent investor relations representative told me in an interview this morning that "so far, nothing has changed."

Let's hope he's right. Ascent burned through more than $15 million in cash in 2007 -- or roughly 40% of the $37.1 million in cash and investments on its books as of Jan. 1.

Worser
Next up is National Financial Partners, which faces a host of problems outlined in a recent investigation by newsweekly Barron's. Among them:

  • Regulatory questions over its life settlement business, in which the broker cashes out life insurance policies for a fraction of their potential worth.
  • Management departures.
  • Declining GAAP earnings.

More can be found in the Barron's article. But I think most of what you need to know is in the table below:

Metrics

2007

2006

2005

2004

2003

Gross margin

18.8%

18.5%

19.6%

22.0%

23.3%

Return on capital

7.6%

8.9%

9.8%

9.6%

9.5%

Source: Capital IQ, a division of Standard & Poor's.

Weaker pricing. Less efficiency. 'Nuff said.

Worst
But our winner is another insurer, Conseco, which hasn't ever really impressed the CAPS crowd. More than half of the commenting All-Star stock pickers -- those whose picks outperform at least 80% of the broader community -- rate it an underperformer.

One All-Star, jester112358, put it simply last summer: "Overpriced and poorly run." The stock is down more than 45% since.

But more losses could be forthcoming. Conseco on Monday issued an ugly preliminary fourth-quarter report that could get worse once the SEC rules on the firm's revenue recognition practices for long-term-care premiums.

Ouch.

More troubling, though, is Conseco's everyday performance -- or lack thereof. Net investment losses doubled from $0.06 per share in Q4 2006 to $0.12 this time around. (Net investment losses were just $0.02 per share in 2005's fourth quarter.)

Revenue is also a problem. Conseco booked $87.3 million in Q4, roughly flat with last year's $87.2 million, which was down 3% from the year prior.

See the pattern here? With or without regulatory issues, Conseco is a business in decline and thus deserves the awful title of Monday'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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