Thursday'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 Thursday:

Company

Closing Price

CAPS Rating

(5 max)

 

Change

52-Week

Range

AMR (NYSE: AMR  )

$5.22

*

(14.29%)

$4.79-$29.32

Yahoo! (Nasdaq: YHOO  )

$23.52

**

(10.06%)

$18.58-$34.08

Spectrum Brands (NYSE: SPC  )

$3.52

*

(8.81%)

$3.21-$7.50

Media General (NYSE: MEG  )

$13.56

*

(8.25%)

$12.96-$35.42

99 Cents Only Stores (NYSE: NDN  )

$7.25

**

(8.11%)

$6.05-$14.89

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 on the list. Today isn't one of them.

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 more than 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 99 Cents Only Stores, which reported a $0.06-per-share net loss on higher revenue and a 1.5% increase in same-store sales.

What gives? "Shrink" -- retail-speak for inventory losses from theft, accounting errors, and damages -- was $5.5 million more than management expected. Had they been right, the retailer's $4.4 million net loss would have been a $1.1 million bottom-line gain.

Ouch.

Worser
Next up is Spectrum Brands, a former guest in this column, which yesterday filed an 8-K report with the SEC that describes newly minted retention agreements for key executives, including CEO Kent Hussey. Quoting from the text:

The Company has granted Mr. Hussey 100,000 shares of the Company's common stock ... subject to certain restrictions with 50% of the shares vesting on the first and second anniversaries of the effective date of the grant. The restrictions will lapse immediately if Mr. Hussey's employment with the Company ... is terminated by the Company without "Cause" ... or in the event of Mr. Hussey's death or "disability" ... or upon a "Change in Control" of the Company.

No press release followed. Makes sense to me. Why advertise that you're handing incentives to executives with unimpressive records of capital management? Behold:

Metrics

TTM*

FY 2007

FY 2006

FY 2005

Return on invested capital (higher is better)

4.0%

4.1%

3.2%

6.1%

Net debt in millions (lower is better)

$2,561.9

$2,390.5

$2,248.7

$2,277.5

Debt/total capital (lower is better)

109.7%

104.4%

83.4%

73.2%

Source: Capital IQ, a division of Standard & Poor's. Fiscal year ends Sept. 30 of the named year.
*Trailing 12 months ended on March 30, 2008.

More debt, lower returns on capital, higher pay. If only I could get a deal like that.

Worst
But our winner is Yahoo!, which has officially ended its flirtation with Microsoft (Nasdaq: MSFT  ) in favor of a new flame: Google (Nasdaq: GOOG  ) .

DoubleGoo will supply ads to Yahoo!, which will then display them on its sites. A report in this morning's Wall Street Journal says the pact could be worth as much as $800 million a year in extra revenue for Yahoo!.

Excellent!

There's just one problem. If Yahoo! so desperately needs help monetizing ads that it has to turn to Google for help, and ads are what funds the business, what does Yahoo! do that's worth anything? Display ads, I suppose, but both Google and Microsoft are getting better at that daily. Anyone else wondering whether Yahoo! is stuck in a no-win game of monkey-in-the-middle?

Yahoo! Back on its own (sort of) and Thursday'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 Tuesday with more stock horror stories.

Fool contributor Tim Beyers, ranked 15,765 out of more than 105,000 participants in CAPS, also writes for Motley Fool 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 likes to eat carrots after midnight.


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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.

  • Report this Comment On June 15, 2008, at 6:17 PM, DMEdwards wrote:

    Okay. Here's the deal. I just finished reading the section on picking great stocks from "The Motley Fool Investment Guide". I typed into my stock screener all 8 criteria for picking a great stock.

    Guess what the ONE stock was that popped up. You guessed it. It's a stock listed above - NDN.

    So which is it? A great Motley Fool pick? Or is it a stinker?

    Can someone please make up the Gardner brother's mind for them?

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