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

X-Rite (NASDAQ:XRIT)

$5.35

*

(16.67%)

$4.85-$16.42

HNI (NYSE:HNI)

$24.82

***

(10.59%)

$24.21-$47.94

GeoEye (NASDAQ:GEOY)

$25.84

*****

(6.78%)

$17.00-$37.37

La-Z-Boy (NYSE:LZB)

$8.30

*

(6.21%)

$5.31-$12.99

i2 Technologies (NASDAQ:ITWO)

$11.63

**

(1.27%)

$10.97-$26.90

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 here. Today is 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 95,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch.

Here is today's list of the worst stocks in the world.

Worse
We begin with GeoEye, a Rule Breakers recommendation that saw its shares climb almost 9% on a good piece of non-news on Wednesday. What these buyers apparently missed is the not-so-good news found in an 8-K filing from later that night. Quoting:

The Company has preliminarily determined that its prior conclusions regarding an ownership change in control ... were incorrect and that a change in control may have occurred in 2005. Since we currently believe that a change may have occurred in 2005, because this change of control occurred within two years of the Company's emergence from Chapter 11, utilization of the Company's pre-reorganization NOL carryforwards are eliminated ... In the third quarter of 2007 the taxable income exceeded the post acquisition losses and therefore the company ... has recorded an additional provision for income taxes of $15.8 million. [Emphasis added.]

And I thought my tax bill was big.

Worser
Next up is La-Z-Boy, which said it would move domestic cutting and sewing facilities to a plant in Mexico and, consequently, shut down a Utah factory. The human toll is expected to be 1,050 workers. Not good.

Executives tried to assuage shareholders by saying that, with these moves, La-Z-Boy should be able to recognize $25 million in annual savings by 2011. It'll need it. Cash flow after dividend payments has been, at best, inconsistent in recent years:

Metrics*

Trailing 12 Months

FY 2007

FY 2006

FY 2005

Cash from operations

$68.4

$33.2

$89.8

$46.0

Capital expenditures

($25.7)

($25.8)

($28.0)

($34.8)

Dividends paid

($24.9)

($24.9)

($22.9)

($22.9)

Cash flow after dividends

$17.8

($17.5)

$38.9

($11.7)

Sources: Capital IQ, a division of Standard & Poor's.

Yuck.

Worst
But our winner is X-Rite, whose technology adds color to all sorts of products and which, on Thursday, said that it would seek to offset declining revenue with $23 million in cost cuts over the next 12 months.

That X-Rite has to resort to cuts isn't a good sign. But this bit from a company press release is even worse:

The Company is currently not in compliance with certain covenants under its secured credit facilities, but is engaged in discussions with the lenders to amend certain terms of its credit arrangements to allow for greater operating flexibility. Further draws on the Company's revolving line of credit would require the approval of the lenders under these facilities. [Emphasis added.]

Makes it pretty clear why urgent cuts are necessary, wouldn't you say?

At least X-Rite isn't alone. WCI Communities (NYSE: WCI  ) faced a similar problem in December. X-Rite and its live-and-in-color credit crunch ... 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 tomorrow with more stock horror stories.


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.

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: 614291, ~/Articles/ArticleHandler.aspx, 9/15/2014 11:21:57 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...


Advertisement