Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



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:


Closing Price

CAPS Rating (out of 5)





Virtusa (Nasdaq: VRTU  )





Freddie Mac (NYSE: FRE  )





Fannie Mae (NYSE: FNM  )





Fleetwood Enterprises (NYSE: FLE  )





Beazer Homes (NYSE: BZH  )





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 Motley Fool newsletter recommendations appear on this list. 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 110,000-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.

We begin with Fleetwood Enterprises, which fell again on concerns over rising fuel costs. Fair enough. But is fuel the only issue here? I don't think so. Here's how Fleetwood compares with peer and Motley Fool Hidden Gems Pay Dirt pick Thor Industries:










Free cash flow (mil)



Source: Capital IQ, a division of Standard & Poor's.
*For the trailing 12 months ended April 27, and 30, 2008, respectively.
ROE = return on equity; ROIC = return on invested capital.

One is producing cash flow in a tough economic environment; the other isn't. 'Nuff said.

Next up is Virtusa, which said it didn't have budget approval for work it had begun for its largest customer. Consequently, Reuters reports, the company lowered its first-quarter earnings forecast to no more than $0.03 per share, well below the $0.15 Wall Street had been expecting.

Talk about irony. Virtusa was recently the top pick among Indian stocks in CAPS for its steady, predictable growth. "Providing IT services is much less volatile than products," All-Star investor Ish100 wrote in March. "They have a number of blue-chip clients providing a steady revenue stream."

Here's the problem: Virtusa no longer competes just with its subcontinent neighbors. American consulting firms such as IBM and Accenture (NYSE: ACN  ) are winning work in India nearly as fast as Infosys (Nasdaq: INFY  ) has caught on here.

But our winner is Freddie Mac, which sank on concerns that the housing crisis could continue through 2008, according to Associated Press reports.

Freddie took a greater hit than most because it is still trying to raise $5.5 billion in capital, all of which will come via stock sales. Yet, as the market deteriorates and pushes its shares lower, the cost of the funding to existing shareholders -- via dilution -- increases.

Think of Freddie Mac as a plane that's nose-dived and has yet to pull up. The longer the tailspin lasts, the harder it'll be to regain altitude. Anyone have a parachute?

Freddie Mac ... badly in need of a bailout and 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. contributor Tim Beyers, who is ranked 20,208 out of more than 110,000 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.

Accenture is an Inside Value pick. Thor Industries is a Hidden Gems Pay Dirt recommendation. Try either of these investing services risk-free for 30 days.

Tim owned shares of IBM 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.

Compare Brokers

Fool Disclosure

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: 680437, ~/Articles/ArticleHandler.aspx, 10/25/2016 1:35:09 PM

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...

Today's Market

updated Moments ago Sponsored by:
DOW 18,190.23 -32.80 -0.18%
S&P 500 2,145.25 -6.08 -0.28%
NASD 5,284.96 -24.87 -0.47%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 1:14 PM
FMCC $1.66 Down -0.02 -1.19%
Freddie Mac CAPS Rating: ***
ACN $115.30 Down -0.50 -0.43%
Accenture CAPS Rating: ****
BZH $10.95 Down -0.33 -2.88%
Beazer Homes USA CAPS Rating: **
FLE.DL $0.07 Down +0.00 +0.00%
Fleetwood Enterpri… CAPS Rating: *
FNMA $1.74 Down -0.02 -0.86%
Fannie Mae CAPS Rating: ***
INFY $15.68 Down -0.32 -1.97%
Infosys Technologi… CAPS Rating: *****
VRTU $20.91 Down -0.38 -1.78%
Virtusa CAPS Rating: ***