Editor's note: In an earlier version of this story, Chesapeake Energy (NYSE: CHK ) was incorrectly listed as a company that had filed for bankruptcy protection. Chesapeake Corp. filed for bankruptcy protection. The Fool regrets the error.
Over the past year, we have written about companies that appear to be on their deathbeds. As we note, not every company will fail, but since that original column, quite a few have either disappeared entirely or experienced 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 savvy investors in our Motley Fool CAPS community of more than 130,000 members have given the lowest rating -- one star -- and then pair that information with financial data that flashes 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 the other stocks that at one time or another were deemed to be on their deathbeds.
|
Stock
|
Price at First Appearance
|
Price Today
|
% Chg
|
|
Esmark
|
$19.13
|
-
|
*
|
|
Lear
|
$15.35
|
$0.96
|
(93.7%)
|
|
Mannatech
|
$5.36
|
$3.71
|
(30.8%)
|
|
Martha Stewart Living Omnimedia
|
$7.38
|
$2.30
|
(68.8%)
|
|
Parlux Fragrances
|
$5.07
|
$0.83
|
(83.6%)
|
|
AMR (NYSE: AMR )
|
$5.82
|
$3.34
|
(42.6%)
|
|
Chesapeake Corp.
|
$1.47
|
-
|
**
|
|
Continental Airlines
|
$9.19
|
$8.96
|
(2.5%)
|
|
NYSE Euronext (NYSE: NYX )
|
$44.41
|
$18.93
|
(57.4%)
|
|
UAL
|
$4.43
|
$4.76
|
7.4%
|
|
Affiliated Computer Services
|
$50.09
|
$46.99
|
(6.2%)
|
|
Delta Air Lines (NYSE: DAL )
|
$5.96
|
$5.68
|
(3.9%)
|
|
Hydrogenics (Nasdaq: HYGS )
|
$1.65
|
$0.45
|
(72.7%)
|
|
Lexmark
|
$33.10
|
$17.09
|
(48.4%)
|
|
Syntroleum
|
$1.95
|
$0.93
|
(52.3%)
|
|
Brinker International (NYSE: EAT )
|
$13.92
|
$18.49
|
32.8%
|
|
NVE (Nasdaq: NVEC )
|
$28.61
|
$31.98
|
11.8%
|
|
Qimonda
|
$1.81
|
-
|
***
|
|
Virgin Mobile
|
$2.80
|
$1.32
|
(52.9%)
|
|
Wendy's/Arby's Group
|
$5.53
|
$5.27
|
(4.7%)
|
*Acquired by Severstal OA on Aug. 5, 2008; **filed for bankruptcy on Dec. 29, 2008. ***filed for bankruptcy on Feb. 20, 2009.
Over the months since these companies first appeared in our stories, Qimonda and Chesapeake have both filed for bankruptcy protection, while Lear hangs on, hoping that it will benefit from the auto parts supplier bailout.
Whistling past the graveyard
The effects of the failing automotive industry reach far out into the economy, informing some of the arguments in favor of bailing out everyone associated with it, from the car makers to the rental companies. Fuel-cell maker Hydrogenics undoubtedly hopes it will also benefit from the auto supplier bailout, because General Motors is one of its biggest shareholders as well as a significant customer, providing almost 10% of the company's revenue in 2007.
Under the bailout proposal, money wouldn't be given to suppliers directly but instead would be channeled through the car companies for them to dole out as they see fit. Assuming hydrogen fuel cells remain an important concept for GM (and because it owns 12% of the company's shares, it has an overriding interest in seeing it survive), Hydrogenics ought to feel confident that it will get an assist from the U.S. taxpayer.
Syntroleum is also trying to get gas to go green. It has teamed up with Tyson Foods to build an alternative biofuel plant that will turn chicken fat into renewable jet fuel, but it only just received enough funding to keep up its end of the financing. As with much that's related to Syntroleum, even the company hesitates to commit fully to its future, noting that the $13 million it received means it hopes it has enough cash to fund operations through the end of the year.
Chew on this
One name not dining at the same speculative table is Brinker International, which operates casual dining chains Chili's, Romano's Macaroni Grill, and On The Border. Although rising unemployment could jeopardize any potential recovery in restaurant stocks, Brinker is taking a page from McDonald's playbook and offering value meals. Analysts have noted that Chili's is offering meals for less than $7, which makes the potential for growth more palatable. But CAPS member SwordAgain is doubtful:
3/26/09 Pitch: Downthumb. Earnings 4/21/09. Huge percentage gain off of lows established when company withdrew guidance. They have pared down debt. Their ratios aren't too bad, but i don't know how they are going to raise more capital for expansion. I think those plans are a bit optimistic. Especially in light of the significant number of their restaurants that have closed their doors.
Rattling the cage
We'll be back next week to identify more stocks that are struggling. 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.
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