Deathbed Stocks Revisited

Over the past year, we've been chronicling companies that appear to be on their deathbeds. As we noted, not every company will give up the ghost, but since that original column, quite a few have either disappeared entirely or seen huge drops in their share prices: 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 have been given the lowest rating -- one star -- from the savvy investors in our 125,000-member Motley Fool CAPS community and then pair that information with various financial ratios that flash like a neon sign that the end is near.

Now that a third of those original companies have gone under or otherwise disappeared, let's take a look at some of those stocks that were deemed to be on their deathbeds.

Stock

Price at First Appearance

Price Today

% Chg

Charter Communications

$1.48

$0.02

(98.6%)

General Motors (NYSE: GM  )

$17.58

$2.55

(85.5%)

Pacific Ethanol

$3.30

$0.36

(89.1%)

Las Vegas Sands (NYSE: LVS  )

$64.11

$2.16

(96.6%)

Jamba

$2.33

$0.44

(81.1%)

Eastman Kodak (NYSE: EK  )

$13.43

$3.36

(75.0%)

FiberTower

$1.45

$0.10

(93.1%)

Ford (NYSE: F  )

$6.12

$2.01

(67.2%)

NxStage Medical

$5.18

$3.21

(38.0%)

Semiconductor Manufacturing Int'l

$3.27

$1.79

(45.3%)

Cott

$2.49

$0.89

(64.3%)

Durect

$3.92

$2.25

(42.6%)

Isle of Capri Casinos (Nasdaq: ISLE  )

$7.21

$3.02

(58.1%)

Nextwave Wireless

$4.74

$0.18

(96.2%)

XM Satellite Radio

$10.73

-

*

China Eastern Airlines

$32.76

$13.46

(58.9%)

Finish Line

$7.59

$4.10

(46.0%)

JB Hunt

$34.14

$21.28

(37.7%)

OfficeMax (NYSE: OMX  )

$14.26

$3.86

(72.9%)

Steak n Shake (NYSE: SNS  )

$6.75

$6.36

(5.8%)

Source: Yahoo! Finance.
* As of 7/29/08, merged with Sirius Satellite Radio.

Over the months since these companies first appeared, Charter Communications announced plans to declare bankruptcy, and Pacific Ethanol defaulted on its debt covenants, though it has received temporary forbearance by the lenders. And General Motors is holding on by the slimmest of threads to solvency, while Nextwave Wireless seems poised on the precipice as well. It wants to divest most of its IP wireless business, and one of its wholly owned subsidiaries has already declared bankruptcy.

Whistling past the graveyard
It wasn't the worst performer, but Isle of Capri Casinos still looks gravely ill, even if it has received a large response to its tender offer to retire $140 million in senior subordinated notes. The gaming industry in general is down on its chips, with even the biggest names in the industry, like Las Vegas Sands, suffering from the economic downturn.

But Isle of Capri still has a lot of poisonous debt and little cash, forcing it to delay its Biloxi casino expansion and shut its Florida Pompano Park horse racing track down for the summer, ending a decade of year-round harness racing. Maybe because it’s a regional gaming house that's not on the Vegas strip, some feel it's insulated from the worst of it. But CAPS member TSIF thinks investors need to know when to give up on this stock:

You gotta know when to hold 'em, know when to fold 'em, know when to walk away, know when to RUN!!!! (Just be glad you can't hear me singing from where you are!!). Despite the three Goldstein Brothers buying up a quarter million shares of Isle, things aren't looking too good on that Isle of Capri....Capri has 18 casino's and a race track in Florida, I don't here much 'kaching" going on right now in those high traffic tourist areas. Maybe I'm too soon, New Orleans might be booming in Feb for Mardi Gras or the Goldsteins may have another ACE up their sleeves, but I'm betting they can't prop this beast up for the next year plus of economic gloom we will be having.

Rattling the cage
We'll be back next week 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.

The Fool owns shares of Steak n Shake. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool's disclosure policy holds no grudge against Ruby.


Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 27, 2009, at 6:31 AM, nicko168 wrote:

    Well, there's only 3 word for 3 AUTO makers...."LET IT GO"..

    Nortel files for chapter 11 & it's still in operation..

    " Being optimism is being stupid"

    Chinese old teaching " Don't tell lies or your tooth will drop"

    When it drop, everyone can see you're lying...When wear a mask, everyone can see you're covering up...ha..ha..

  • Report this Comment On August 10, 2009, at 1:55 PM, FinneasMacabre wrote:

    I have a view of the Biloxi Isle Of Capri from the inside looking out, and it doesn't look pretty from in here either. Compared with years prior to Hurricane Katrina corporate has all but ignored the individual properties. The cost cutting has cut so deeply in to staffing, and qualified management, that customer service, which is our main product, has been severly impared.

    All the experienced directors and managers have either been replaced with cheap imitations, or have had their duties consolidated under other departments jurisdictions. All the experience gathered over the years in the various departments and the local market is sacraficed for short term savings. The is no learning from our past mistakes, only repeating past mistakes over and over. Prior success's have been equally misplaced.

    The Isle's only claim to fame has been becoming succesful in non-competative markets, and that's not much of a victory. They have no idea how to intelligently spend revenue to drive business in a competative environment.

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