Market volatility has washed up some surprising stocks against the buck beachhead. I took a look at five stocks that are now trading for roughly a dollar last month. The menu is so deep that I'm back to discuss five more.
Buck the trend
As I noted last month, you have to watch what you eat. This isn't a buy list. A lot of these marked-down stocks will continue to fall in price. They come with baggage for a reason, and whether it's pesky debt levels or the inability to turn a profit, their fundamentals will have to improve before their share prices follow suit.
Ideally, it takes just one or two winners to offset a handful of losses, but that's clearly a risky approach for investors.
Let's go over this week's five names.
Select Comfort (Nasdaq: SCSS ) -- $0.98
Remember when Sleep Number beds were all the rage? Select Comfort is still making its signature air-chambered mattresses. The problem is that fewer people are buying them.
Comps fell by a steep 20% at the company's namesake stores during this year's second quarter, and that's coming after a 14% plunge a year earlier. Between the soft economy holding consumers back from big-ticket items and the residential real estate market meltdown, Select Comfort is having a rough night's sleep.
The upside here is that analysts do see the company turning a profit over the final two quarters of this year and for all of 2009. It may be a stretch, but Select Comfort had been consistently profitable until the first half of this year.
Chances of going to zero: 20%. With bubbling debt, Select Comfort better deliver on the projected profitability. I'll believe it when I see it.
Openwave (Nasdaq: OPWV ) -- $0.90
A few years ago, this maker of software solutions for wireless handsets was riding high. More and more phones were using its programs, and the sky seemed to be the limit, given the cell-phone boom.
But it's a more competitive marketplace now. And the company has had to cope with assets sales, a CFO switch, and even an internal investigation. The company is two years removed from its last quarterly operating profit. All 10 of the analysts following Openwave see more red ink next year.
Chances of going to zero: 30%. The Web and software juggernauts are moving in. Openwave is still growing, and it may be an attractive buyout candidate, but the road doesn't get any easier from here.
Jones Soda (Nasdaq: JSDA ) -- $1.03
This is typically a good time of year for Jones Soda. It's when the edgy maker of fizzy cane-sugar-sweetened soda can strut its stuff with eclectic flavors for Halloween and Thanksgiving. Yes, this is the company that puts out premium bottled pop that tastes like green bean casserole and turkey gravy.
Jones Soda thought it was moving up into the big leagues when it broke into the canned-soda market last year, but it's been a disaster. The mainstream push has cheapened its brand, and the replacement of its founding CEO a year ago has failed to yield results.
Chances of going to zero: 40%. Jones is still coming out with new flavors and new products like vitamin-spiked water packets. All it will take is one hit to get it back on track, but the clock is ticking.
Fannie Mae (NYSE: FNM ) -- $0.95
The rise and fall of Fannie Mae has been told countless times, by more knowledgeable Fools than me. The one thing that bears pointing out is that the distressed home loan enabler was trading for nearly $60 a year ago.
Don't you dare call Fannie Mae a penny stock, though. Like previous dollar-menu entry Sirius XM Radio (Nasdaq: SIRI ) , Fannie Mae commands a market cap of around $1 billion.
It's hard to fathom what Fannie Mae will look like in a year or two, given the constant state of flux in the financial markets. However, of all the names in this installment of the dollar menu, it's probably the most incredible one to see if you happen to be just waking up from a year-long nap.
Chances of going to zero: 30%. Even if it seems inevitable at this point, Fannie Mae would be a heartbreaker if common shareholders were wiped out.
Circuit City (NYSE: CC ) -- $0.35
The consumer electronics chain is in trouble. In a last-ditch effort to avoid filing for bankruptcy protection before the holidays, the superstore concept is reportedly considering closing down dozens of stores and laying off thousands of employees.
It's not where Circuit City thought it would be, especially when Blockbuster (NYSE: BBI ) went public earlier this year with its desire to acquire Circuit City. Then again, with Blockbuster hitting an all-time low of $1.20 yesterday, it may not be long before the company joins this menu.
The worst part of this story isn't that things didn't work out with Blockbuster, as the video rental giant ultimately passed on making a buyout offer. The head-shaking that came before it is what really stings. Circuit City actually walked away from buyout offers at $8 a share in 2003 and $17 in 2005. Doh!
Chances of going to zero: 70%. The company is already working with the same firm that walked Kmart through its retail bankruptcy several years ago. With shoppers already weary heading into the telltale holidays, it may get ugly fast.
Here are some other ways to buck the buck:
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