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:

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. Sadly, today is one of them.

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 105,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch. You should, too.

Thus, here's today's list of the worst stocks in the world.

Worse
We begin with Martha Stewart Living Omnimedia, which on Tuesday filed an 8-K in which it announced that board member Thomas Siekman, a member of the firm's audit and corporate governance committees, will resign by the end of June for "personal reasons."

Fair enough. That happens. But I don't like that Siekman is stepping down at roughly the same time as CEO Susan Lyne is leaving, for reasons thus far unknown.

Here's what we do know. Martha Stewart's namesake empire has returned to profitability under Lyne, and now the reins are being handed to a pair of co-CEOs -- media chief Wenda Harris Millard and merchandising president Robin Marino.

Because, you know, power-sharing usually works out soooooo well.

Worser
Next up is Stock Advisor selection CompuCredit, which the Feds are accusing of deceptive business practices in marketing credit cards. Here's how Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection, put it in an agency statement:

It is important for all consumers -- including those in the subprime market -- to have access to credit card products. But the marketing of these products must be truthful; it should not -- and cannot -- be misleading about the true costs and terms of the credit card

Misleading? Those are serious accusations. I've seen the worst credit card ever and, if the FTC is to be believed, CompuCredit is marketing similar garbage as plastic gold.

Foolish colleague Rich Duprey doesn't buy it. Here's an excerpt from his take, posted to the Stock Advisor boards this week:

I've read through the FTC's complaint against CompuCredit and looked through the attachments they provided, and it looks like someone really has an axe to grind against this company ... Perhaps management didn't kowtow to them, but this seems like a really, really spurious complaint.

Rich goes on to advise investors to read the complaint and attachments and decide for themselves, which I consider excellent -- and Foolish -- advice.

In the meantime, though, I've got no choice but to add CompuCredit to today's list. There's simply no way for management to avoid the exorbitant legal fees and PR distractions to come.

Worst
But our winner is Aventine Renewable Energy, a frequent guest in this column for its apparent liquidity issues.

On Tuesday, the entire ethanol sector took a beating, including VeraSun, which I've singled out as a favorite unloved growth stock, and Pacific Ethanol (NASDAQ:PEIX). Why? The weather. And crop yields. And rising oil prices. And worldwide food shortages. And ... well, you get the idea.

My point is simple. The ethanol business is very likely to see years of extreme ups and downs. Surviving volatility like that requires (a) careful capital management and (b) plenty of liquidity. Aventine's recent history strongly suggests it has neither.

Aventine Renewable Energy and its desperately-in-need-of-a-liquidity-life-vest business model ... Tuesday'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.