Deathbed Stocks Revisited

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Over the past 11 months, we've been chronicling companies that appear to be on their deathbeds. As we note, not every company will give up the ghost, but since that original column, quite a few are either gone or have dropped deep into penny stock territory: Fannie Mae, Merrill Lynch, Lehman Brothers, Bear Stearns, Washington Mutual, and XM Satellite Radio to name just a few.

What we do is check for stocks that savvy investors in our Motley Fool CAPS community of more than 120,000 members have given the lowest rating -- one star -- and then pair that information with various financial ratios that could flash like a neon sign that the end is near.

Plus, over the first 20 months of the service's existence, CAPS data show that newly minted five-star stocks offer the best opportunities for investors, whereas the lowest-rated companies fared worst. The tales of woe left by the companies that have appeared in this column underscore that data.

So let's go back again to see what has happened since those stocks were deemed to be on their deathbeds last April.

Stock	Price at First Appearance	Last Closing Price	% Chg
Hilb Rogal & Hobbs	$31.19	$46.00*	47.5%
Capital Bank	$9.87	$6.15	(37.7%)
Ocwen Financial (NYSE: OCN)	$4.37	$7.84	79.4%
Poniard Pharmaceuticals	$3.66	$2.65	(27.6%)
Valence Technology (Nasdaq: VLNC)	$3.53	$2.02	(42.8%)
Spectrum Brands	$4.34	$0.08	(98.2%)
IDT	$3.86	$0.42	(89.1%)
Fortress Investment Group (NYSE: FIG)	$12.90	$2.40	(81.4%)
Pilgrim's Pride	$24.82	$0.54	(97.8%)
Spansion	$3.15	$0.25	(92.1%)
UBS (NYSE: UBS)	$35.38	$12.22	(65.5%)
Labopharm	$1.96	$0.50	(74.5%)
First Charter	$30.11	$31.00**	3.0%
Herbalife (NYSE: HLF)	$42.42	$16.81	(60.4%)
Alaska Air	$20.97	$23.41	11.6%

* Acquired by Willis Group Holdings at $46 per share on Oct. 1, 2008.
** Acquired by Fifth Third Bancorp (Nasdaq: FITB) at $31 per share on June 6, 2008.

Although none of the companies from this series found itself planted in bankruptcy, four of the companies from last April's "Deathbed" columns ended up being acquired by others. There also seem to be a number of companies at risk of being completely devalued.

Whistling past the graveyard
It hasn't exactly been electrifying the markets, but Valence Technology announced a deal with an electric motorcycle manufacturer for its lithium phosphate battery technology. Yet, with no details of the deal released, we don't know how much it will actually be worth to the battery maker. Perhaps the most interesting aspect is that the bike maker, Brammo, was able to raise $10 million in financing this past September from private equity that included the venture capital arm of Best Buy (NYSE: BBY).

Last August, CAPS member StreetJustice recognized the speculative nature of Valence Technology but thinks its battery technology might catch on:

"[Valence Tech] is a bet on the future as far as I'm concerend. The batteries they make are one of the best soulutions to our energy crisis for the long-term. They are cheap right now and considered a speculative buy, but I think [Valence Tech] is a great buy."

Following four straight quarterly losses due to massive writedowns, the former chairman of UBS -- ousted in April -- announced he was returning more than $18 million in pay. A symbolic gesture, perhaps, and one that won't change the financial fortunes of the bank, but it's one that many of his U.S. counterparts should consider emulating.

CAPS member onepremise thinks the additional move by UBS to not hand out bonuses to current management is a good move:

"One of the few that is actually holding back management bonuses. There's a possibility this stock might survive the panic 2008 crisis and probably be around after the recession."

Rattling the cage
We'll be back next week in our regular column to identify more stocks that are leaving investors feeling ill. In the meantime, it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from your favorite stock's CAPS page. Sign up today, absolutely free, and let us know whether you think a stock is headed for its demise.