Blogs & Comment

Six worst performing stocks of 2011

These six companies have seen their stock prices plummet more than the rest.

115515689

Norm Betts/Bloomberg via Getty Images

While most people will be celebrating Canada this weekend, more than a few investors will be downing a beer to celebrate an end to the first six months of the year. The S&P/TSX Composite Index hasn’t done much since January—it’s down 1.89% year-to-date—but, before you curse the nearly neutral returns, know that it could be worse. A lot worse. Imagine if your portfolio was heavily weighted to Sino-Forest Corp., or Yellow Media Inc., the company behind Yellow Pages. If you owned those companies—the top two worst performing stocks of the year so far—you’d need more than a few beers to drown your sorrows.

They’re not the only stocks that experienced massive losses. Here are the top six worst performing stocks of 2011 with a market cap of at least $500 million.

Sino-Forest Corp. (TRE)

Stock price January 4: $24.32
Stock price June 30: $2.75

No company has been hit harder and fallen faster than Sino-Forest Corp., the once mighty Mississauga-based forestry company. After Muddy Waters Research released a report earlier this month claiming the company had committed fraud, it’s stock plummeted, falling 85.48% in June and 88.54% year-to-date. Its share price has fallen from $24.32 in January to $2.75 today and unless the company can prove it is operated properly, it’s likely the stock will drop even further before the end of the year.

Yellow Media Inc. (YLO)

Stock price January 4: $6.20
Stock price June 30: $2.68

Not only do people not want the Yellow Pages delivered to their door, they don’t want to own the company that produces the book either. Investors have hammered Verdun, Que.-based Yellow Media, owners of the Yellow Pages Group, Canpages, Canada411.com and other sites and publications—its stock price has fallen 56.61% year-to-date. Concerns over its $2.1 billion debt load—it recently sold its Trader Corp. unit to help pay that down—and its massive, and possibly unsustainable, 26% yield has scared investors. It hasn’t helped that Credit Suisse downgraded the stock to underperform this month.

Golden Star Resources Ltd. (GSC)

Stock price January 4: $4.35
Stock price June 30: $2.16

Littleton, Col.-based Golden Star Resources is the TSX’s worst performing gold company with a 53.61% share price drop so far this year. Scotiabank recently downgraded the company to a sell after it announced its cost for mining gold would be about $400 per ounce higher than the industry average. “We would not be in a rush to own a gold producer with exceptionally high costs,” wrote Scotia Capital’s Trevor Turnbull in a report. The company also sold half of its 2011 production in advance for $1480 per ounce. That worries many investors who think gold prices are still on the rise.

Eastern Platinum Ltd. (ELR)

Stock price January 4: $1.80
Stock price June 30: $0.80

Vancouver-based Eastern Platinum mines and develops platinum deposits in South Africa. It’s had a rough ride this year. On June 28 a Toronto law firm launched a class-action lawsuit against the company alleging it didn’t disclose changes to its Crocodile River Mine. On May 11 it reported a Q1 loss of $5.6 million, compared to earnings of $824,000 the year before. It also just settled a two year long wage dispute with its African workers. All these negatives have added up to big losses—the stock price is down $53.11 year-to-date.

Heritage Oil Corp. (HOC)

Stock price January 4: $6.81
Stock price June 30: $3.14

Located near the U.K. in Channel Islands, most of this TSX-listed independent oil and gas producer’s projects are located in politically sensitive countries such as Russia, Pakistan, Iraq and Uganda. The stock is down a whopping 52.06% year-to-date, partly because its plan to drill off Malta’s shores is being hampered by a border dispute between Malta and Libya. In April, Tullow Oil, a former Heritage partner in Uganda, sued the company for $313 million claiming it’s owed money to cover taxes it paid in 2010. For these reasons, UBS downgraded the company from buy to neutral and slashed its target price.

Research in Motion (RIM)

Stock price January 4: $59.02
Stock price June 30: $28.26

The Canadian smartphone giant can’t seem to do anything right these days. Despite shipping 500,000 PlayBooks, far more than analysts had expected, and an 18% increase in handset shipments in Q2, falling profits and worse than expected revenues have sent investors running. While some analysts think the company can bounce back, others are ready to write off the Waterloo-based tech business. In May National Bank Financial analysts downgraded the company to underperform, while RBC cut its target price from $90 to $55 and dropped its rating to “sector perform”. RIM’s problems have resulted in a 51.95% drop in its share price this year.