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Wednesday'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 Wednesday:


Closing Price

CAPS Rating

(5 max)





Jack in the Box (NYSE:JBX)










First Marblehead (NYSE:FMD)





Cameco (NYSE:CCJ)





Steak n Shake (NYSE:SNS)





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 and newsletter recommendations appear here. Today, sadly, is one of those days.

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 100,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch.

Here's today's list of the worst stocks in the world.

We begin with Cameco, which, thanks to higher uranium spot prices, reported a 130% gain in per-share earnings. But that may not be as good as it seems. Here's how Foolish colleague Toby Shute put it yesterday:

In the uranium mining business, unit costs are up 15%, which takes some of the fun out of those higher prices. A production expansion at McArthur River is running behind schedule, and a cloud of uncertainty continues to hang over the flooded Cigar Lake project. Then there's the joint venture over in Kazakhstan, where Cameco's partner is being stingy with raw material supplies. This could cut the project's 2008 output in half.

Still others foresee rising development and acquisition costs. CAPS investor subvertical explained in a February pitch. Quoting: "Russia will be charging more for weapons uranium... [Cameco] is paying less than $10/pound and spot [prices] for [uranium] have been around $85 recently."

He's referring to a 1999 deal with Russian supplier Tenex for taking leftover weapons-grade uranium and making it available for commercial use. Right now, Cameco is buying on the cheap, and Tenex apparently wants better pricing.

If Tenex gets that -- a check of Cameco's form 40-F filing from March confirms only that "discussions have commenced" -- then earnings could suffer.

Next up is Steak n Shake, a former guest in this column for its supbar earnings and lagging returns on equity and capital. Nothing much has changed.

Yesterday, the restaurateur reported a $0.10-per-share loss on a 6% decline in revenue in its second quarter. Same-store sales fell 6.3%. The good news? Comps were down 9.5% in Q1. (Yippee?)

Oh, and here are Steak n Shake's probably about-to-get-worse returns on capital and equity, through Q1:


12-Months Ended 12/19/07

FY 2007

FY 2006

FY 2005

Return on invested capital





Return on equity





Source: Capital IQ, a division of Standard & Poor's. Fiscal year ends on last Wednesday of September of the named year.


But our winner is LCA-Vision, which wrapped up its annual stockholder meeting by cutting its per-share quarterly dividend from $0.18 to -- wait for it -- $0.06. Two-thirds of that payout you were banking on? Yeah, it's gone.

Color me unsurprised. LCA-Vision was removed from the Stock Advisor list of recommendations for failing to deliver growth. And what little growth it did deliver in the first quarter came at the expense of margins.

Consider yourself warned. Stocks that cut dividends to subsidize low-profit growth aren't worth owning; they're worth shorting.

LCA-Vision and its anyone-know-where-I-left-the-profits management team ... Wednesday'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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