Photo: American Apparel
Traders are quick to talk trash on the floor, especially when its a stock they’re short.But there are a number of companies that have developed a rabid like following — some good, most bad — that get investors talking.
Business Insider compiled a list of the 21 most controversial stocks.
The companies have made headlines over the past year for possible fraud, massive growth, a sex scandal, hostile shareholders, and poor executive decisions, among other reasons.
They tend to move wildly, and engender fierce debate about which way they’re going next.
Sector: Electronics Retail
52 Week Stock Performance: -23.6 per cent
What's Going On: Same store sales have been lethargic at the nation's largest electronics retailer, and that's just the start of its problems. Best Buy recently announced it would shutter 50 stores and that its longtime CEO Brian Dunn had stepped down amid a probe into misconduct. The company is also betting heavily on mobile, with plans to have as many as 800 new cellular-only stores over the next few years.
Bull Case: The company still pumps out profits and could see some strength if it can refocus on core operations. Higher margin products, including mobile, could save the co.
Bear Case: The company has turned into a testing ground for consumers who plan to make final purchases online at Amazon and other websites that have a better cost structure than Best Buy.
52 Week Stock Performance: -56.9 per cent
What's Going On: Groupon came to market this year but its stock has been under increasing pressure after its accounting firm said it had weak internal controls. But Groupon also came under fire before it went public. A number of company's that use the service have warned of eye popping losses and higher than expected returns have weighed on results.
Bull Case: The company is at the forefront of a growing industry and can begin to turn a profit if it can get its costs under control.
Bear Case: Weak internal controls and a money losing business operation.
52 Week Stock Performance: +16.0 per cent
What's Going On: Salesforce.com has been a controversial pick for some time -- mainly because its shares trade at a massive price to earnings ratio. Investors have been shorting the company heavily, but it continues to trend higher.
Bull Case: Salesforce.com generates strong cash flows on the back of its subscription model.
Bear Case: The stock is overvalued and insiders have been selling shares, never a good sign of executive confidence.
52 Week Stock Performance: -32.8 per cent
What's Going On: This momentum darling was on the up-and-up until one hedge fund magnate, David Einhorn of Greenlight Capital, called into question a number of the companies practices, including possible fraud. The stock took a dive and the company's reputation has not yet returned positive. However recent results have proved strong, and Green Mountain has aggressively pushed partnerships with brands like Dunkin doughnuts and Starbucks.
Bull Case: After massive buy outs of competitors, Green Mountain has reached a scale that would be hard for some competitors to copy -- protecting its high margin coffee business.
Bear Case: Investors remain sceptical of the companies internal controls. Expiring patents put the company at risk from giants like Starbucks, which has already announced its intentions to enter the market.
Sector: Consumer Household Products
52 Week Stock Performance: -20.8 per cent
What's Going On: The maker of carbonated soda machines has been beset by rivals that seek to steal SodaStream's market share.
Bull Case: A new, faster soda maker expected to be released in the fourth quarter will help the company fend off rivals, and demand for the product will keep sales strong. Further, a partnership with Kraft foods has expanded the product's drink offerings and increase demand for products other competitors cannot offer.
Bear Case: Consumers don't care about faster soda and aren't fazed by its brand-name drinks, making it easy for competitors to eat away sales.
52 Week Stock Performance: +13.7 per cent
What's Going On: Unlike Urban Outfitters, American Apparel has been under intense scrutiny as it saw losses mount in 2010 and 2011. But the company has seen some surprising comp gains at the start of 2012, with preliminary same-store sales up 20 per cent in March. American Apparel also secured an $80 million revolving credit line from Crystal Financial.
Bull Case: Those made in America tags have helped the company get to market quicker than competitors and early results show consumers are shopping in its stores again.
Bear Case: Investors have been sceptical of CEO Dov Charney's ability to right the company for sometime, especially after some unflattering litigation.
Sector: Snack Foods
52 Week Stock Performance: -63.3 per cent
What's Going On: Diamond Foods was on the verge of its largest acquisition, Pringles, before reports surfaced that it had manipulated supplier payments to boost itself in negations with Pringles owner Procter & Gamble. An investigation prompted the board to fire its Chief Executive and Financial officers and was forced to restate certain financial documents. P&G ultimately sold to Kellogg.
Bull Case: Niche brand Kettle Brand potato chips have grown rapidly in the U.S. and the company has aggressively worked to varnish its reputation among shareholders.
Bear Case: The company recently had to suspend its dividend payments to renegotiate its revolving credit facility and has remained tight lipped about future expansion plans.
52 Week Stock Performance: +87.3 per cent
What's Going On: The boutique entertainment studio had a rough few years, with activist shareholders (Carl Ichan) and disappointing results out of its film business. But then it purchased Sumitt Entertainment, producer of the 'Twilight' series, and found a hit in the 'The Hunger Games,' sending shares rallying.
Bull Case: 'The Hunger Games' will provide a multi-year revenue stream for the company as it attempts to solidify itself among more established Hollywood players. Television productions, including AMC's Mad Men and Showtime's Weeds and Nurse Jackie, have proved solid hits.
Bear Case: Until 'The Hunger Games' Lions Gate's last highest grossing film (before the Summitt acquisition), was Fahrenheit 9/11, which made a third of 'Hunger' has brought in. Separately, declines in the DVD market have negatively impacted all film producers.
52 Week Stock Performance: -5.7 per cent
What's Going On: Same-store sales have been challenged at Urban Outfitters, even as total sales continue to climb. The company attributed most of its difficulty to assortment issues at Anthropologie and Urban. But new leadership at both brands have helped right the ship.
Bull Case: Rebounding consumer spending and better assortment at its core operations have proved beneficial. A recent executive poach from Abercrombie & Fitch should help.
Bear Case: A lawsuit out from the Navajo Nation could temper quarterly results. But worse, if the company cannot right its fashion assortment and has to go to markdowns, margins will take a dive.
52 Week Stock Performance: -54.7 per cent
What's Going On: After a number of blunders this year -- including the decision to split the company, and the subsequent reversal -- shares in Netflix have fallen from highs seen in 2011. Those hiccups brought calls for a new leadership team and drove customers to competitors like Blockbuster.
Bull Case: Netflix was able to keep its price increase in place, buttressing margins. Also an aggressive push into original programing could turn it into the next HBO.
Bear Case: That push for original content, and bidding wars with HBO, have increased the company's costs immensely. Separately, Netflix forecast a loss for the start of 2012.
Sector: Technology and Communication
52 Week Stock Performance: -75.1 per cent
What's Going On: The inventor of the Blackberry cannot catch a break. After a data breach last year put the company's reputation on the line, and a series of disappointing device releases, the company seems unable to put out a product consumers actually want to buy.
Bull Case: The company could be a takeover target because of its depressed valuation.
Bear Case: Even under new leadership, acquisitions like QNX, and a new marketing campaign, RIM has yet to bring a product to market that could challenge Apple's iPhone or most devices running on Android.
Sector: Home Builder
52 Week Stock Performance: +38.3 per cent
What's Going On: Lennar offers an easy investment into the distressed real estate market -- making it a good bet on how an investor thinks the overall U.S. housing market will perform. But the company's name also came up as a short position for many investors, including Whitney Tilson of T2.
Bull Case: Housing starts rebounded sharply in March and although the new home market is tepid, at best, many economists believe the U.S. market has passed the bottom.
Bear Case: What housing recovery?
52 Week Stock Performance: -84.0 per cent
What's Going On: Solar prices have fallen 46 per cent in the last year, and as the largest thin-film solar producer, First Solar hasn't been immune to the energy company shake-out.
Bull Case: New green energy initiatives in the United States or smaller than expected cutbacks in green energy funding in Europe cushion the troubled industry from further losses.
Bear Case: The largest supply of solar technology is set to arrive on the market even as European countries like Spain, France, and Britain cut back on incentives to fund green energy at higher-than-market energy prices.
52 Week Stock Performance: -7.3 per cent
What's Going On: Yahoo's board has been under intense pressure to turn the company around, and has faced some shareholder hostility. Interestingly, the company beat both earnings and revenue expectations during the first quarter, but guided for a light second quarter.
Bull Case: New leadership team, coupled with the aggressive cost cutting, will help Yahoo boost its bottom line.
Bear Case: Yahoo is continuing to lose share in the important search market to Bing and Google. Beyond its Asian operations, there's little at the company that's worth sticking around for.
Sector: Electronics Retail
52 Week Stock Performance: -61.3 per cent
What's Going On: RadioShack has had difficulty over the past several years, registering lackluster same-store sales trends. The company, which hoped that adding Verizon Wireless in place of T-Mobile would bolster cellular activations, did not see much pick up. Instead, it had to go overly promotional and sell lower cost phones.
Bull Case: RadioShack is a possible takeover candidate.
Bear Case: Weak margins and disappointing results forced the company to suspend its stock buy back program.
52 Week Stock Performance: -6.4 per cent
What's Going On: Take Two has slowly been on the mend after years of straining results, rebuffed buy out offers, and some disappointing gaming results. Activist shareholders made headlines in 2011, but the company trudged through. It currently forecasts a profit of at least $2 per share in fiscal 2013.
Bull Case: Carl Ichan could always make a hostile bid for the company.
Bear Case: Take Two suffers from a lack diversity in gaming. Whereas larger companies like EA Games can get by after disappointing sales or a flop, that's much more difficult to bear at Take Two.
Sector: Internet Search
52-week stock performance: +130 per cent
What's going on: The company reported strong fourth quarter earnings, with the number of active online marketing customers up 13 per cent from a year earlier and revenue per online marketing customer growing 62 per cent.
Bull Case: It's China's Google. They've also weakened Google's online map stranglehold.
Bear case: Any company with a web-based business in China is going to be subject to volatility -- witness the temporary blackout Baidu suffered last week.
52 Week Stock Performance: -50.6 per cent
What's Going On: Sina owns the Twitter of China, Weibo, and has amassed a massive user base. But the company has faced difficulty and had to suspend commenters for a 72-hour period to clean up its boards - at the request of the government.
Bull Case: It's the Twitter of China and has the opportunity to outstrip American offerings like Facebook.
Bear Case: China can shut down the site overnight if comments skew to topics it dislikes.
52-week stock performance: -61.8 per cent
What's going on: 'China's Facebook' IPO came out with a bang at $18 last May but quickly sunk to $3 a share. It has bounced back this winter, though, and the company says advertising sales have improved.
Bull Case: The company posted Q4 net income of $44.3 million compared with a charge-driven loss of $33.9 million a year earlier. Management gave a bullish revenue projection for the coming year in March.
Bear case: Heavy competition from microblogging services and potentially from Facebook itself.
Sector: Oil & Gas Operations
52 Week Stock Performance: -16.6 per cent
What's Going On: InterOil has been a controversial buy for some time. The company, which says it is sitting on massive oil reserves, has come up against investors who don't believe it will ever be able to tap the oil in Papua New Guinea. Many traders are short the stock.
Bull Case: If InterOil can tap the reserves it has found in Papua New Guinea, or better yet, sell to a larger oil conglomerate.
Bear Case: A number of analysts and investors don't buy the company's claims that it's actually able to get to those oil reserves.
52 Week Stock Performance: +87.4 per cent
What's Going On: Apple has, and remains, a favourite amongst the investment community. Over the past several years, demand has reached a fever pitch whenever the company releases a new iPhone and rumours of what's next in the product pipeline keep analysts intrigued.
Bull Case: Strong cash flows. Strong and growing revenue and net income. Great product pipeline. Great leadership.
Bear Case: The stock is overvalued. The high cost to wireless carriers could mean higher prices to consumers -- potentially at a psychological difficult price point. Also, recent supply chain issues that disturbed Apple owners could negatively impact sales.
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