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

(5 max)

%

Change

52-Week

Range

Beazer Homes (NYSE:BZH)

$8.14

*

(11.14%)

$4.53-$38.76

UAL (NASDAQ:UAUA)

$12.42

*

(10.07%)

$12.42-$51.60

SanDisk (NASDAQ:SNDK)

$30.02

****

(7.46%)

$19.54-$59.75

US Airways (NYSE:LCC)

$7.31

*

(6.28%)

$6.10-$36.81

Perry Ellis (NASDAQ:PERY)

$23.96

**

(4.96%)

$12.83-$35.22

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. Today isn't 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 105,000-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 SanDisk, whose CEO yesterday issued cautious comments at an investor conference. Quoting: "With the oil prices hitting $127 a barrel, discretionary spending is going to be affected."

The implication? SanDisk doesn't have the brand power to sustain a spending slowdown the way Apple (Nasdaq: AAPL  ) has. But you knew that, right? SanDisk's management has had trouble producing returns on equity and capital since 2005:

Metrics

TTM

FY 2007

FY 2006

FY 2005

Return on invested capital

2.8%

2.7%

8.1%

16.1%

Return on equity

4.8%

4.5%

5.5%

17.3%

Source: Capital IQ, a division of Standard & Poor's. SanDisk's fiscal year ends on the Sunday closest to Dec. 31. TTM = trailing 12 months.

Worser
Next up is US Airways, whose pilots' union joined the chorus of those opposed to a merger with United Airlines. Shocking.

We've seen this before. Labor woes were at least partly to blame for a failed merger in 2000. This time, the US Airline Pilots Association opposes a deal because United has "mounting losses and a dismal balance sheet," according to a statement issued by the union's top spokesperson.

To be fair, United pilots also oppose a deal on the dated-but-legitimate grounds that US Airways stinks at service. (Not that UAL is much better.)

Yet the point remains: Management wants a merger, labor doesn't. And, all the while, talk of nationalizing the airlines bubbles below the surface. (Sigh.)

Worst
But our winner, once again, is UAL. I know; I've beaten this drum for months. Can you blame me? Virtually everything I wrote about United in January has come to be. Quoting:

I'll be blunt: United Airlines parent UAL is the worst stock for 2008 because sustainable profits at the carrier depend on cheap oil ... If press reports are to be believed, airlines are back in merger mode; rising fuel prices may be the cause. Here's how UAL finance chief Jake Brace put it in an interview with trade magazine Airline Business: "(Fuel prices) may help get people to the table."

Fast-forward five months. Continental (NYSE: CAL  ) spurned what seemed like a done deal, and as I just discussed, US Airways pilots are lobbying its executives to give UAL the stiff-arm. You know it's bad when others in your industry want nothing to do with you.

UAL and its stuck-at-the-merger-dance-without-a-date management team ... 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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