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:

Company

Closing Price

CAPS Rating (5 Max)

% Change

52-Week Range

AMR (NYSE: AMR  )

$6.22

*

(24.15%)

$6.00-$29.32

Moody's (NYSE: MCO  )

$36.91

****

(15.92%)

$31.14-$73.69

Virtusa (Nasdaq: VRTU  )

$10.45

*****

(12.77%)

$8.55-$19.97

Tween Brands (NYSE: TWB  )

$19.20

**

(10.11%)

$16.99-$49.00

Red Robin (Nasdaq: RRGB  )

$35.05

**

(9.41%)

$26.91-$44.60

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, 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 105,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch. You should listen, too.

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

Worse
We begin with Moody's, which, according to an article in Europe's Financial Times, made serious errors in rating $4 billion worth of foreign debt.

Frankly, I'd rather not see Moody's on this list. The stock has been a winner for both Inside Value and Stock Advisor and, I think, remains a vital and well-positioned business. No lesser than Warren Buffett feels similarly.

What I can't get past is that, according to the FT's reporting, documents show management knew of the error early last year. True or not -- we won't know till an outside law firm completes an investigation -- expect the ambulance chasers to pounce.

Worser
Next up is Tween Brands, a former guest in this column that on Wednesday reported better-than-expected first-quarter sales that should have been even better. Quoting Foolish colleague Ryan Fuhrmann from his take on the report:

The same-store-sales figures illustrate the divergent trends; Justice saw a stellar 22% improvement in comparable sales, while Limited Too reported a 7% fall. This resulted in an overall comp drop of 1%, as Tween operates twice as many Limited Too stores as it does for the much more popular Justice franchise. Management attributed the challenging Limited Too results to a miss in color selections in the sportswear segment, as well as increased cost-consciousness from moms facing rapidly rising gas prices. [Emphasis added.]

I don't doubt management's explanation, but these problems aren't new; some Fools saw the signs two summers ago. Here's how CAPS investor LifeIsGood123 put it in August of 2006: "Nobody really likes Limited Too anymore. And who the heck came up with the word 'tween'?"

I agree. Talk to me when Tween sheds those last few unwanted pounds or, better still, spins Justice off as a separate brand, a la Chipotle (NYSE: CMG  ) .

Worst
But our winner, once again, is AMR. The struggling parent of carrier American Airlines is the worst of the world's worst industry for all of the reasons I cited in CAPS last month:

1. Labor problems. Pilots are taking ads out in the paper pointing fingers at management for customer service failures just as executives try to defend a ludicrous bonus plan. ...

2. Fuel prices. Oil over $114 a barrel as I write. [Above $135 per barrel as of earlier today.]

3. Lost revenue. Canceled flights. Customer defections. Overtime for MD-80 repairs.

All of this is as true today as it was then. But the story is worsening: AMR yesterday said it would cut jobs and capacity and introduce new fees for baggage.

It's so bad that the best a Standard & Poor's analyst could say about AMR is that he thinks it "has enough cash to avoid bankruptcy for the next year." Talk about faint praise.

AMR and its rapid descent toward the bankruptcy courts ... 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.

Moody's is a recommendation of both the Inside Value and Stock Advisor services. Chipotle is a Rule Breakers pick. The Motley Fool Hidden Gems team has recommended Chipotle's B shares. Try any of these market-beating services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers, who is ranked 15,899 out of more than 105,000 participants in CAPS, also writes for Rule Breakers. He hopes that Keith Olbermann doesn't mind the blatant theft of his "Worst Person in the World" segment from Countdown. Remember, Keith, imitation is the sincerest form of flattery. Tim didn't own shares of any of the stocks mentioned in this article at the time of publication. The Motley Fool's disclosure policy thinks that cooked spinach is the worst veggie in the world.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 650627, ~/Articles/ArticleHandler.aspx, 12/19/2014 3:11:35 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement