Tuesday'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 Tuesday:

Naughty?
Well, OK, we can't exactly call these stocks naughty. But none of them get much love from our 65,000-person-strong Motley Fool CAPS community of amateur and professional stock pickers. 

To the contrary -- when it comes to these stocks, CAPS investors have gone thumbs-down more often than film critic Roger Ebert. They don't believe any of these stocks are worth owning, and that some may be worth shorting.

Which of today's candidates is worst? Read on, dear Fool.

Bad
We begin with Occam Networks, which restated earnings for 2004 through 2006. Errors ranged in scope from $200,000 to $1.7 million.

But the biggest problem wasn't with the bottom line. It was at the top, with revenue. Quoting from the press release:

The Audit Committee identified errors pertaining to the timing of revenue recognition rather than the ability to collect or ultimately realize revenue. The Audit Committee did not identify any instances where the Company recorded revenue that was not ultimately collected or realizable. [Emphasis added.]

Translation: "We may have stuffed the channel, but at least it swallowed."

Anyone else wondering whether a severe bout of indigestion is next?

Worse
Next up is Domino's Pizza, which made investors sick with an undercooked quarterly report. Earnings fell 55%. Free cash flow, meanwhile, declined 29%. Where's the dough, Domino's?

CEO Dave Brandon blamed higher expenses for Domino's woes:

Unprecedented cost pressures and a weak consumer environment negatively affected our domestic results in the quarter, which made striking the right balance between increasing prices, while operating in a period of declining traffic, very difficult. [Emphasis added.]

There's truth to what Brandon says. Interest expense nearly doubled, thanks to a recapitalization. Total cost of sales rose 5%. Obviously, Brandon and his team have a ton of work to do.

Why, then, is the company signing him to a new three-year employment contract? Quoting from the Domino's press release:

The Company reported that its Board of Directors has approved moving forward on a three-year employment agreement for Dave Brandon through 2010 at its October 11th meeting. The Company and Mr. Brandon are in the process of negotiating the terms of that agreement.

Mind a suggestion, Dave? Make sure that new contract puts a substantial portion of your salary and bonus at risk. That way, if your attempted turnaround fails, you'll pay the price right alongside the common investors betting on you.

Worst
But our winner is Pinnacle Gas Resources (NASDAQ:PINN) for the ludicrous spin it put on a $207 million all-stock sale to peer Quest Resource.

Here's how CEO Peter Schoonmaker described the deal in the press release:

The merger combines dominant acreage and operating positions in two prolific low risk resource plays with over one million acres under lease that will allow considerable growth in production, reserves and pipeline development. [Emphasis added.]

Ready for the actual numbers? Here you go:

Dominant? Low-risk? That's what you get when you combine two serial cash-burners? Pinnacle Gas Resources and its they'll-believe-it-if-we-say-it spin doctors ... Tuesday's worst stock in the CAPS world.

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See you back here tomorrow for more stock horror stories.