And the World's Scariest Stock Is ...

By Alyce Lomax
November 9, 2009 | Comments (20)

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The votes are in. According to a vote from our Foolish community, The World's Scariest Stock is Crocs (Nasdaq: CROX).

There were many formidable contenders for this dubious honor, but Crocs ultimately took a bite out of its closest respective rivals, Palm (Nasdaq: PALM) and Goldman Sachs (NYSE: GS).

One of the scariest elements of our Halloween-inspired exercise might have been the vocal outrage expressed by Sirius XM (Nasdaq: SIRI) fans that their stock was even nominated at all; a few migrated over to the Crocs article comments when they were done scorching their own turf.

Still, your collective opinion seems spot-on; on Friday, Crocs lived up to its scary rep. The stock plunged after releasing its quarterly results, closing down 16%. Crocs may have been able to report a quarterly profit of $22.1 million, but that number was helped by a major tax gain of $14.4 million and other one-time advantages.

And while Crocs was able to generate a 1.7% increase in revenue (a tricky feat for many companies these days), it also disclosed that revenue included $11.5 million in "planned sales of previously impaired footwear." Selling merchandise that had already been impaired helped improve Crocs' gross profit by $9.6 million, recouping some of the loss that it had already written off.

Before you get all excited, note that Crocs said it would return to a quarterly loss in the current quarter. Ouch.

With low-quality earnings, a swampy outlook, and its founding fad gone chillingly cold, Crocs certainly deserves its spot as the world's scariest stock. Friday's plunge is just one more reminder why Fools are better off investing in high-quality companies.

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Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy. Try any of our Foolish newsletter services free for 30 days.

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 November 09, 2009, at 3:04 PM, SIRIDoom wrote:

    The economy is so bad that the guy who made $50 billion disappear (Madoff) is being investigated by the people who made over $1 trillion disappear (our policymakers)!

    PS

    SIRI sucks!!! Going to 58 cents. Without Goldman Sachs control and High Speed Computer Trade, SIRI would be 38 cents.

    SIRI rev-split 25 for 1 share soon...

  • Report this Comment On November 09, 2009, at 3:09 PM, RAF22 wrote:

    SIRI is definitely a scary stock .... IF YOU ARE STILL SHORT!

    This stock is grinding its way to progressively higher levels and has already pounded a lot of shorts into the ground. There will be more to come.

  • Report this Comment On November 09, 2009, at 3:48 PM, SIRIDoom wrote:

    Who shorts a 60 cent garbage stock like SIRI? Only CEO Mel KarmaCrook in buddy buddy deals with Goldman Sachs. Yes, the original merger “Quick and Dirty” Mel gave a lean for shares in trade for debt. Goldman Sachs Barrows shares on the lean to short a hedge on the Merger loan. All investigated by the SEC and all within the law. Mel gave Goldman the ability to screw SIRI share holders on day one.

    The same CEO, Mel KarmaCrook made a deal with stock holders and voted to issue millions of share to pay debt and then rev-split to recover the saturation. This is a well know penny stock scam (issue share and rev-split). However the economy slide delayed the rev-split and the NASDAQ suspended the 1.00 share rule. The rev-split was planned and is pending..

    Now, lets look at this great SIRI stock:

    Billions of debt. A debt load to choke on. One time fee's of millions on every quarterly report just to manage the debt.

    Share saturation over 3 billion.

    More saturation pending a massive debt swap on the Malone Liberty media bailout deal.

    And Reverse Split planned 10 to 50 shares of your shares for 1 new share...

    SIRI is great... Great way to lose money... LOL

  • Report this Comment On November 09, 2009, at 4:03 PM, SIRIDoom wrote:

    SIRI uses the revolving credit line and charges it off on investors. They keep it funded by 1. Share issue 2. Malone deal 3. Bond issue. They actually turn the credit line into an asset by putting it on share holders. Is that how you want to see a company get income?

  • Report this Comment On November 09, 2009, at 4:31 PM, RAF22 wrote:

    Same comments from SIRI-Doom all the way up from the mid 30's. What does that tell you??

  • Report this Comment On November 09, 2009, at 4:40 PM, SIRIDoom wrote:

    "dilution of shares"

  • Report this Comment On November 09, 2009, at 4:49 PM, SIRIDoom wrote:

    Same sales pitch from RAF since SIRI was 6.00 a share. The SIRI advertiser has been pumping pro SIRI propiganda all the way down.

    What I do is free. I do it to save other from what people like RAF did to me by selling this junk stock. Mel and Goldman Sachs pay RAF and an army of advertisers to sell SIRI so we can all be milked out of money...

  • Report this Comment On November 09, 2009, at 5:41 PM, RAF22 wrote:

    SIRI-Doom - If Mel and Goldman Sachs are paying me to sell SIRI, please tell them both to send in the check - because I'm still waiting!! For the record - my first posts regarding SIRI were when the stock was in the .30's and indicating the likelihood of picking up technical strength. I have been accumulating the stock since .18 - buying more around .25 to .28 - and at successive levels along the way to recovery near present levels. My average cost is around .46 and I am still accumulating stock on each pullback. I am an independent trader with no ties to any other company - I know this bursts your balloon SIRI-Doom - but that's just the way it is. I am a strong believer in the company's business plan and current trajectory and think those who are still looking in the rear view mirror on this one have their heads where the sun never shines! Of course, SIRI-Doom - you would be an expert on that contorted position!

  • Report this Comment On November 09, 2009, at 6:05 PM, SIRIDoom wrote:

    Billions of debt. A debt load to choke on. One time fee's of millions on every quarterly report just to manage the debt.

    Share saturation over 3 billion.

    More saturation pending a massive debt swap on the Malone Liberty media bailout deal.

    And Reverse Split planned 10 to 50 shares of your shares for 1 new share...

  • Report this Comment On November 09, 2009, at 6:59 PM, Shindoesca wrote:

    Personally I think the scariest stock is WHI - W Holding.

    The company finally finished restating their 2008 numbers last week and the stock jumped from $ 11 to $ 15 in no time whatsoever. But with 3.3 million shares outstanding that still only gives them a market cap of 52 million compared to book value of 915 million.

    According to the latest fillings the shareholder equity (assets minus liabilities) in the end only fell from 965 million in 2007 to 915 in 2008, so there must be some information somewhere that would explain this ridicously low P/B of 0.06?! If someone knows something please be so kind as to inform us!!

  • Report this Comment On November 09, 2009, at 8:00 PM, amtberg wrote:

    Agreed, CROX is scary. OTOH, it's still up about 150% since I started following it about five months ago...

  • Report this Comment On November 09, 2009, at 10:12 PM, WoodyDog1400 wrote:

    SIRIDumb, move on dude, your post are worthless, just like your stock account...

  • Report this Comment On November 09, 2009, at 10:13 PM, WoodyDog1400 wrote:

    SIRIDumb, move on, your post are worthless, just like your trader account...

  • Report this Comment On November 09, 2009, at 10:22 PM, Steiny27 wrote:

    SiriDOOM -

    Can you explain why you fail to mention that a great majority of the billions of debt isn't due until 2013? Why do you fail to mention that 100s of millions (I don't have the exact #'s in front of me - I will be happy to post them if you would like) of debt maturities were extended out until 2013 and beyond within the past year? Tell me how many co's have been able to refinance debt at preferential rates during the last few months?

    Why do you fail to mention that the one-time charges aren't current cash-based expenses and are just accounting charges? Yes the charges affect GAAP income but it doesn't tell the story of where the company is at right now. Why do you fail to mention that SIRI has posted operating profits in Q1, Q2, and Q3 during some of the worst quarters in the history of the US? Why do you fail to mention the free cash flow the company is attaining?

    I could go on and on but that's probably enough since you won't give an intelligent response except that there is share dilution pending, a reverse split pending etc. We all know about the Malone deal, it was either bankruptcy or 40% of the company. The reverse split, per Mel, will be used for listing requirements, if necessary. We have until March, then SIRI can file a 6-month extension. I think that's plenty of time to get over $1.00.

    I'm not saying this stock is a perfect investment, but you can't just spew out the negative without looking at the postives as well. The stock is up from $.05 to $.63 within 9 months, has substantial positive cash flow, pushed out debt until 2013 and beyond, and generated operating profits in 2009 -- not bad considered the past 3 Q's have been the worst in most of our lifetimes.

  • Report this Comment On November 10, 2009, at 3:18 AM, SIRIDoom wrote:

    LOL I cant explain anything to hard headed SIRI paid bloggers.

    Most people know SIRI sucks eggs. but keep selling. Your going to need that pay check.

  • Report this Comment On November 10, 2009, at 3:22 AM, SIRIDoom wrote:

    SIRI sucks!!! More saturation pending a massive debt swap on the Malone Liberty media bailout deal.

    And Reverse Split planned 10 to 50 shares of your shares for 1 new share...

  • Report this Comment On November 10, 2009, at 9:20 AM, brjmedia wrote:

    Coal companies are looking strong at the moment. With a cold winter heading our way they should stay moving for a while.

    Good luck in your trading!

    Brandon

    www.TradeWithPros.com

  • Report this Comment On November 10, 2009, at 10:02 AM, dedmunds wrote:

    JUST RELEASED!!!

    SIRIDoom and CRAMER are getting MARRIED!!!

    They are SIRI IN LOVE!!!!

    OHW ISINT'T THAT SPECIAL!!!

  • Report this Comment On November 13, 2009, at 2:10 PM, RobertC314 wrote:

    Does anyone else get tired of seeing a thousand of the same posts by SIRIDoom any time an article mentions Sirius in passing?

    Anyone have any rational thoughts on whether CROX has bottomed out or whether it would be worth it to buy a few put contracts? (please, I stress the "rational")

  • Report this Comment On November 15, 2009, at 9:34 PM, tkell31 wrote:

    Funny, I had to laugh when the guy said the 30s. Now most would think $30s...but no in this case it is 30s as in cents. Have to admire a company that can generate so many zealous defenders of a stock that once was in the $60s and now anyone could buy multiple shares for the change in their couch. And just out of curiosity what short positions did it destroy? The poeple who jumped on board once it hit a nickle? Peace out SIRI lovers, but if you try to sell that garbage you have to expect some people to point out the truth.

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11/23/2009 4:00 PM
GS $172.00 Up +1.99 +1.17%
Goldman Sachs Grou… CAPS Rating: ***
CROX $5.38 Down -0.07 -1.28%
Crocs, Inc. CAPS Rating: *
PALM $11.47 Down -0.27 -2.30%
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SIRI $0.63 Up +0.00 +0.44%
Sirius XM Radio CAPS Rating: **

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