Thousands of companies trade on the US exchanges. However only some of them are worth investing at any given time. In fact, some of these companies should never be listed in the first place. But they do trade for some reason. Hence for investors willing to invest their hard-earned money in the stock market, the toughest part is to identifying the stocks they want to invest in and the ones they want to avoid. In an earlier post I listed five stocks to consider for potential investment.

Here are five stocks that I think investors may want to avoid:

1.Company: Gardner Denver Inc (GDI)
Current Dividend Yield: 0.29%
Sector: Misc. Capital Goods

Rationale: This mid-cap company is in a messy situation as it tries to sell itself to SPX Corp (SPW) or seek the help of Private Equity firms.Already attorneys smelling blood with violations of fiduciary duty by the GDI management. So better to stay away from this stock.

2.Company: Herbalife Ltd (HLF)
Current Dividend Yield: 3.00%
Sector: Personal & Household Prods.

Rationale: This Amway-type company is in the midst of an epic battle between two wealthy hedge fund managers – Daniel S. Loeb and William Ackman – with one shorting it and the other supporting it. The best thing for ordinary investors to do is simply enjoy the drama and avoid the stock like a plague.

3.Company: DISH Network Corp (DISH)
Current Dividend Yield: No dividends paid
Sector: Broadcasting & Cable TV

Rationale: This satellite TV provider is the meanest company in America according to a story in Bloomberg BusinessWeek. And the company is run purely for the benefit of its owner Charlie Ergen, who holds the most voting power.

4.Company: Build-A-Bear Workshop Inc (BBW)
Current Dividend Yield: No dividends paid
Sector: Retail (Specialty)

Rationale: This company and its business model is a fad.
5.Company: Weight Watchers International Inc (WTW)
Current Dividend Yield: 1.18%
Sector: Personal Services

Rationale: This $3.3 billion company runs a questionable business model and no one really knows if it helps people lose weight. All that is clear is this company has a huge following and aggressively pushes its products on unsuspecting women across the world. Big corporations support to peddle its products on their premises and endorsement by celebrities adds more disgrace to this fad.

Note: Dividend yields noted are as of Jan 11, 2013

Disclosure: No Positions