3 service stocks down since March '09

Though the market is up dramatically from the lows, weak spending has caused these companies to suffer

By InvestorPlace Mar 18, 2010 6:57AM

worst stocks to buyThe Dow just marked a 17-month high Wednesday after gaining 48 points. The major indexes are up about 60% from the March 9 lows in 2009.

 

But the rising tide has left behind a few boats. In fact, these stocks are not just lagging but taking on water in a hurry. That means investors should flee these picks like rats from a sinking ship!

 

Nine of the worst stocks (complete list here) posted an average loss of 17.7% in the last 12 months of trading. But three service industry stocks in particular are worth calling out because they are concrete examples of the challenges faced by many companies as consumers and businesses rein in spending.

 

First up is professional services stock Dun & Bradstreet (DNB) is down “just” 1.3% in the last year (that’s from March 18, 2009 to Wednesday’s close). Of the nine worst stocks of the last year, this one is the least bad of the bunch. That’s because DNB’s service is providing commercial information and insight on businesses worldwide, including risk management. That’s not a bad gig in these tough times. The trouble is just finding companies that have the cash to pay you. Most recently, the stock saw revenue slip in the fourth quarter, driving profits down 16% year over year.

 

Next comes Apollo Group (APOL). As the operator of the University of Phoenix, APOL would seem like a good recession-proof play. After all, job retraining seems like it would be in high demand -- and it is. But this stock is down 9.9% in the last 12 months due to increased bad debt. I guess when you don’t have a job you can’t pay tuition necessary to find a new one. In February, Apollo warned its Q2 numbers would be just as vile as previous results, with bad debt ballooning to 6.5%.

 

The worst service stock in the bunch is H&R Block (HRB). The tax preparation company is down 13.1% in the past year. The economic downturn really took a toll on this company because unemployment “simplified” tax returns for millions of Americans. Coupled with less spending that could be itemized on returns and a dead housing market with no interest to write off, many filers just didn’t need much help. Tie that with people saving a buck by doing their own taxes and you get a rough go of things for H&R block.

 

Still, -13.1% isn’t too bad . . . the worst performer in the last year is down a brutal 59.1%! Find out the company in the complete list of the 9 worst stocks of the last year.

 

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