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Today’s worst 3 large stocks

The S&P / ASX 200 Index (Index: ^AXJO) (ASX: XJO) has ended flat at 4,716.6, after a topsy-turvy day on the market. Overnight, the Dow Jones Industrial Average gained 0.1%, while the S&P 500 lost 0.1%.

The Australian dollar is down slightly against the US dollar, currently buying around 105.5 US cents.

These three stocks were the worst performers from the top 50, losing 1.9%.

QBE Insurance Group (ASX: QBE) fell 1.9% to close at $11.53. Investors were probably irked by comments from US president, Barrack Obama, in which he warned Republican legislators that a failure to raise the US’ debt ceiling would lead to financial chaos. QBE has a significant portion of its investments in US government bonds, and could be severely affected by ‘financial chaos’ in the US. Another example of “The sky is falling”?

Fortescue Metals Group (ASX: FMG) also lost 1.9%, to end at $4.64, as the company announced that it had terminated a proposed deal with shale gas explorer, Oil Basin Limited. The deal would have seen Fortescue diversify away from its one and only product of iron ore. Although financially small for Fortescue, at just $4.2 million, the move was more symbolically significant, given the miner’s total reliance on iron ore.

Rail freight and ports operator Asciano Ltd (ASX: AIO) was the third large cap stock to fall 1.9% today, closing at $4.75. The stock may be pausing for breath, after rising by more than 10% since the end of November. Either that or investors are shying away after having snuck a peak at Asciano’s balance sheet, with its net debt to equity ratio of 81%, not including $1.3 billion in operating leases. Not that that is the only worry. Increased competition in ports and an expensive capital expenditure program, coupled with a massive debt load suggest an uncertain outlook.

If you only invest in one company this year, make it our “Top Stock for 2012-13.” Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool writer/analyst Mike King owns shares in QBE Insurance. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

 

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