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:

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 isn't 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 110,000-person-strong Motley Fool CAPS community of stock pickers speaks with a poor rating or a negative pitch. You should listen, too.

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

Worse
We begin with Agria, which released unaudited 2007 and first-quarter 2008 results yesterday that, on balance, were good. Not as good is what the report was missing:

1. A cash-flow statement.
2. Audited results.

Um, Agria management? In case you don't yet have a calendar, it's going to be July in four days. Just thought you should know in case -- oh, I don't know -- you'd like to give investors a more comprehensive view of the business?

Worser
Next up is China Sunergy, which yesterday priced a $50 million convertible debt offering. I understand why. As of March, it had $121.8 million in short-term debt on its books and has yet to produce a penny of free cash flow.

Still, can I vote to end convertible offerings? Too often, the debt becomes stock and dilutes existing shareholders.

Well, OK. Let's not end them. Chip Carlson of the Greenspring Fund (GRSPX) invests in convertibles and is crushing the market this year. Dilution is what troubles me.

It's a math problem; borrowed capital has to provide a return above the cost of borrowing. Otherwise, existing investors suffer. China Sunergy produced a -- wait for it -- 0% return on invested capital in 2007. Why should we believe that management will do better this time?

And, really, if China Sunergy was having liquidity issues, why take on $121.8 million in debt that, by definition, would have to be repaid within a year? It's nonsense.

Worst
But our winner is Palm, which reported awful fourth-quarter results yesterday. Revenue fell 26%. A year ago, it reported $0.15 per share of net income; yesterday, it was a net loss of $0.40 per share.

CAPS investor JTHokie can't be surprised. Quoting from his pitch from earlier this month:

Hmmmmm.....which would I rather have, a Palm or an iPhone? Really tough choice (sarcasm). The only people in love with this stock are the ones who bought a Palm back when they made phones that were competitive. They're not anymore, and I don't see them ever coming out with anything that can compete with an iPhone.

That's not entirely fair. I know people who love their Treos; I did when I had one. I've since traded up to an iPhone, and, sadly, I'm not alone:

Source: Gartner; market share is reported for smartphones.

Ugh. Palm, once a leader, is now "other," more than enough to make it 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 Tuesday with more stock horror stories.