And the Worst Stock for 2009 Is …

If you thought 2009 would suddenly heal all the wounds that last year inflicted on stocks, think again. Plenty of companies still face just as many challenges as they did during 2008, if not more. Not all of them will be up to the task.

Our Foolish writers chose 10 companies as candidates for the worst stock of 2009. Then we asked our Motley Fool CAPS community to tell us which one they believe will be the ultimate loser. Judging from the results, you have plenty of pessimism for all of these stocks. In the end, though, investors returned to the roots of the financial crisis to pick a winner.

Surprising financials
Going in, you might have expected financial stocks such as Citigroup (NYSE: C  ) and Bank of America (NYSE: BAC  ) to be odds-on favorites. But although these companies garnered plenty of downward-pointing thumbs on CAPS, they also earned support from others. More people actually picked these stocks to outperform the market going forward.

Best of the worst
Retail has had a horrible year, and prospects don't look too bright going forward, either. So it's no surprise that Best Buy (NYSE: BBY  ) took the fifth-worst spot. Even though it proved victorious against its rival Circuit City, that doesn't mean it won't have to suffer through tough times.

You weren't hungry for these stocks
A pair of food and beverage stocks, Starbucks (Nasdaq: SBUX  ) and Panera Bread (Nasdaq: PNRA  ) , ended up in the No. 3 and No. 4 slots, respectively. While Starbucks has closed hundreds of stores, laid off workers, and seen its core pricing strategy called into question, Panera has bucked the trend by passing higher prices along to its customers. But Panera may have less success meeting lofty investor expectations.

Turn out the blue light
Just missing the top spot was retailer Sears Holdings (Nasdaq: SHLD  ) . With retail hurting, and the prospects for commercial real estate looking increasingly iffy, Sears could easily suffer a painful double whammy if the recession doesn't let up. Investors weren't willing to bet on that happening anytime soon.

This winner is in the doghouse
The stock you picked as the worst of 2009 is Hovnanian Enterprises (NYSE: HOV  ) . Our CAPS community is convinced that the worst of the collapse in housing is still to come. When it does, the homebuilder stocks currently in the most precarious financial condition -- like Hovnanian -- will see even steeper losses than they have over the past several years.

Thanks to everyone who participated in our contest. If you didn't, is it because you haven't joined our 125,000-strong Motley Fool CAPS community yet? Sign up for free and chime in on your favorite picks and pans today. It's fun, informative, and potentially profitable.

Sears Holdings, Starbucks, and Best Buy are Motley Fool Inside Value picks. Starbucks and Best Buy are Motley Fool Stock Advisor selections. Bank of America is a former Motley Fool Income Investor pick. The Fool owns shares of Starbucks and Best Buy. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Dan Caplinger owns shares of Starbucks. The Fool's disclosure policy makes you a winner.


Read/Post Comments (9) | Recommend This Article (37)

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 February 11, 2009, at 6:51 PM, randy5539 wrote:

    I agree With most of the article But Why was Best Buy chosen that is a big miss. The closeing of circuit city will give best buy at least an extra 6 billion a year. Also with the closeing of tweeter and many more. Also Best buy as a company is comping up over last year 6.6 percent already. And its looking even better Some stores comping 10 percent. I believe that this stock is a must invest. Look at the innovation of the company. And the staff. Also not only is best buy off to a good start this year in a economic downfall best buy still gained market share. When the dust clears this year expect Best Buy to be at the top.

  • Report this Comment On February 11, 2009, at 7:49 PM, wcr3627 wrote:

    What about fsol. Are your redcomending buy or sell?

  • Report this Comment On February 11, 2009, at 9:59 PM, Rasbold wrote:

    Wow, I am surprised to not see General Motors on the list.That is my hard sell for the year.

    A little something about Hovnanian. They DBA'd as Forecast Homes in California, I was a contractor on many of their projects during the boom, and I can tell you will certainty that not one stick of lumber went into those houses WITHOUT mold on them, Black Mold. Unbelievable!

    Laissez les lawsuits rouler!

    I was the ELECTRICAL contractor, by the way!

  • Report this Comment On February 12, 2009, at 8:00 AM, sgarnett wrote:

    I think the blue light is associated with K-mart, not Sears.

  • Report this Comment On February 12, 2009, at 6:20 PM, FLEESEee wrote:

    I still think Starbucks will do well in the LONG run, I still have faith in H. Schultz thinking, and reorginize the whole company, and get ride of all the ,"Dead Wood", so to speak. I'm keeping all my Shares,& hopeing for the best.Signed W.D.

  • Report this Comment On February 13, 2009, at 6:12 PM, skepticalmj wrote:

    So does Motley Food pay these CAPS members for using their research and recommendations? They sure seem to be using their statistics in a lot of venues -- even the million dollar one. I don't know if they do but they should let CAPS members join at a steep discount? It's only fair.

  • Report this Comment On February 13, 2009, at 6:25 PM, fm2009 wrote:

    sgarnett - sears owns kmart

  • Report this Comment On February 14, 2009, at 12:15 PM, indiansail wrote:

    Doesn't K-mart own Sears??

  • Report this Comment On February 14, 2009, at 3:48 PM, hopingupward wrote:

    Again, why bby, it's one of the few greens in my pf !!!!

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