The Biggest Losers of 2008

Good riddance, 2008! While investors may wish to box up the memories and commit them to oblivion, a quick glance back can provide valuable insight into the year ahead.

Incredibly, a simple query using the stock screener tool at Motley Fool CAPS reveals that roughly 950 companies have shed at least 75% of their market cap over the past year. Just as we would skim through a junk pile before hauling it to the dump, though, let's look at some of the year's worst-performing stocks, in case they include some diamonds in the rough.

We'll employ the collective wisdom of 120,000-plus CAPS investors to see which losers they believe will eventually become winners. We can use the CAPS stock screener to identify companies trading at least 85% below where they were a year ago, while still retaining the favor of CAPS members with at least 1,000 outperform picks and a four-star or five-star rating -- the best. Finally, to peek at their balance sheets, we'll query companies with at least $1 per share in cash and a debt to equity ratio below 1.25. According to CAPS members, here are some of the best of the biggest losers:

Company

52-Week Price Change

CAPS Rating (5 max)

LT Debt to Equity Ratio

Cash per Share

First Marblehead (NYSE: FMD  )

(93%)

*****

0.36

$1.54

Excel Maritime Carriers (NYSE: EXM  )

(92%)

****

0.99

$2.41

Suntech Power Holdings (NYSE: STP  )

(91%)

****

1.01

$3.93

Rio Tinto (NYSE: RTP  )

(87%)

****

1.16

$6.74

Navios Maritime Holdings (NYSE: NM  )

(86%)

*****

0.46

$2.67

Chicago Bridge & Iron (NYSE: CBI  )

(85%)

****

0.30

$2.54

Manitowoc (NYSE: MTW  )

(85%)

*****

0.13

$2.91

Data compiled from Motley Fool CAPS on Dec 5, 2008.

First Knucklehead
At first glance, with a market value below the company's cash on hand, student loan specialist First Marblehead may seem like a compelling value. More than 3,000 CAPS members apparently agree. However, its liquidity may soon be soaked up by a troubled subsidiary, and the company's $500 million student loan portfolio faces a tough road ahead. The lingering credit crisis threatens to send default rates higher as debt-ridden graduates encounter a weakening job market. I believe the student loan market remains in a state of fundamental decline, and I recommend tossing this one out.

The shippers have gone dry
While I recently highlighted the potential relative strength of dry bulk shipper Navios Maritime over some of its competition, the perfect storm that has battered the entire industry has only strengthened further. Between diminished global commodity demand, charter rates that are leading owners to idle their vessels, and the possibility of several debt-laden shippers breaking loan covenants or even going private, the picture looks little better heading into 2009. Despite their continued support from the CAPS faithful, I urge Fools to approach both Navios and Excel with a metric tonne of caution.

We'll see the sun again in 2010
Persistent cloud cover has sent investors fleeing from solar stocks lately, but not the talented bunch at CAPS. With more than 4,000 outperform picks, Suntech Power enjoys the largest following among these biggest losers, and I share their optimism. As fellow Fool Toby Shute pointed out, the majority of anticipated revenue declines represent delayed sales rather than canceled ones, while reduced capital expenditures will likely boost efficiency and bring grid parity within closer reach.

Don't dive into the Rio
Speaking of the sun, Rio Tinto is a premier global miner of pretty much everything under it. A year ago, I would have declared it impossible for this behemoth of the then-sizzling commodity bull market to make the list of 2008's biggest losers. The dramatic implosion of prices for everything from copper to aluminum has knocked this company straight onto its back, raising concerns over the debt burden it shouldered during its acquisition of Alcan in 2007. With deep cuts to the company's capital expenditures and workforce on the horizon, Rio could face a bumpy ride into early 2009.

The erector set
While I've given less consideration to crane-maker and shipbuilder Manitowoc than its more specialized competitors, the numbers point to a potential bargain in these shares. They sport the lowest debt-to-equity ratio of the group, plus cash holdings representing more than one-third of the entire market capitalization. A similar case can be made for energy infrastructure player Chicago Bridge & Iron. Beyond the significance of their financial moats, I view both companies as potential beneficiaries of a likely worldwide focus upon infrastructure spending in response to economic weakness.

The Foolish final word
Whether or not some of 2008's biggest losers become next year's winners, it's clear that 2009 will remain a challenging environment for investors. Featuring thought-provoking blogs, insightful stock pitches, and an array of helpful research tools, Motley Fool CAPS can help keep next year's biggest losers out of your portfolio. See you there!

Further Foolishness:

Chicago Bridge & Iron is a Motley Fool Global Gains recommendation. Suntech Power is a Rule Breakers selection. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Christopher Barker thinks all Fools are winners. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns no shares in the companies mentioned. The Motley Fool has a victorious disclosure policy.


Read/Post Comments (6) | Recommend This Article (42)

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.

  • Report this Comment On December 09, 2008, at 12:31 AM, FinancialFellow wrote:

    Fortunately for me I didn't have any investment tied up in the above stocks. Presently I've been dabbling in beat down stocks - betting on which ones will recover. As it stands right now I'm batting .500 (GM has been a loser and Citibank a winner - for now anyway).

    It is awefully tempting to roll the dice on some stocks in an attempt to make a killing. Not that I plan to get rich off this approach or anything but its always nice to take advantage of a good opportunity. Speaking of getting rich here's an interesting article about how much money you need to have to consider yourself rich: http://financialfellow.com/2008/12/06/poll-how-much-money-do...

  • Report this Comment On December 09, 2008, at 3:01 AM, Mmmmick wrote:

    re: NM Navios

    3 clicks on their company website isn't a lot of DD.

    It does however list a fleet almost fully chartered at avg mid 20k range as far out as 2014.

  • Report this Comment On December 09, 2008, at 8:50 AM, XMFSinchiruna wrote:

    Mmmmick,

    Thanks for the comment. Here's an article on NM from last month, at which point I thought they looked very well positioned.

    http://www.fool.com/investing/general/2008/11/18/where-greek...

    Subsequently, some analysts have expressed concern for NM's ability to meet loan covenants, and vessel charter rates have continued to deteriorate sharply. When the disparity between contract rates and spot charter rates reaches extreme proportions, as it appears to have done presently, I perceive risk of clients breaking contracts to re-price at or near spot.

  • Report this Comment On December 09, 2008, at 2:32 PM, Mmmmick wrote:

    TMF Sinchiruna

    There is certainly a risk of contract renegotiation. China currently playing that game. My point isn't that NM is bulletproof but that their circumstances aren't as bleak as indicated by the this article, which appears to tie NM to the BDI.

    Pps movement isn't so bleak last five days. Thanks for the link.

  • Report this Comment On December 31, 2008, at 2:14 PM, terribletruth wrote:

    I think it is wrong to bailout bad money with good taxpayers money for a heafty punishment.

    Jobs Jobs Jobs to prevent deflation like japan.

    Inflation is inevidable with bailing out to more jobs

    detrimental.

    Chase the gamblers fraudsters for the loss of premeditated laundering of billions of cash and restore the balance for productive tax payers,the poor

    the weak and the feable,our duty as educated socities.

  • Report this Comment On December 31, 2008, at 2:16 PM, terribletruth wrote:

    wish all a happy and prosperous 2009

Add your comment.

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: 789944, ~/Articles/ArticleHandler.aspx, 8/28/2014 7:26:51 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