We've all heard of the "death rattle," the last gasp from a lost soul's lungs. Sometimes, we seem to hear it from the companies in which we invest. Revenue dries up. Margins contract. Profits evaporate. All these signs suggest that their condition is worsening -- a financial death rattle, if you will.

Stocks in sickbay
Don't assume that all such companies are goners. Some will barely cling to life, while others will make a full recovery. Here, however, we're seeking companies that have all but given up the ghost.

For help, we'll turn to the clever coroners at our 130,000-strong Motley Fool CAPS community, where members give the thumbs-up or thumbs-down to some 5,300 stocks. We've unearthed a handful of stocks that look like they might be headed six feet under, based on their rock-bottom one-star ratings.

Now we'll palpate their pulse with some quick tests for liquidity -- who knows, maybe we'll still find some signs of life! The current ratio and quick ratio (also called the "acid test" ratio) give us an idea of a company's ability to pay its bills, while the Altman Z-Score suggests companies in danger of bankruptcy. Companies scoring 3.00 and above are considered safe; between 2.70 and 2.99 are "yellow flags;" between 1.80 and 2.70 have a good chance of going bankrupt within two years; and those with scores below 1.80 mean the cryptkeeper is waiting.

Here's today's list. The question is, are these companies only mostly dead, or have they already given up the ghost?


CAPS Rating

Current Ratio

Acid-Test Ratio

Altman Z-Score

Recent Price

Krispy Kreme Doughnuts (NYSE:KKD)






Sealy (NYSE:ZZ)






Star Scientific (NASDAQ:STSI)






Systemax (NYSE:SYX)






Winnebago (NYSE:WGO)






Sources: Motley Fool CAPS; Capital IQ, a division of Standard & Poor's.

We obviously don't know whether these companies are headed six feet under, so don't short them based on their appearance here. Moreover, some companies, including software makers and financials, don't neatly fit into the Altman Z-Score scale. Yet our primary screen remains those stocks that CAPS investors have given one-star status, meaning they're possibly destined to seriously underperform the market. Just this past December, General Growth Properties appeared here; it's now declared bankruptcy.

RVs stalling for time
Considering the price of recreational vehicles and their gas consumption, it's not surprising to find RV makers declaring bankruptcy. Fleetwood Enterprises and Monaco Coach recently bit the big one; only a purchase of its assets by Navistar International (NYSE:NAV) saved the latter from the junk heap. RV parts suppliers like Motley Fool Hidden Gems recommendation Drew Industries (NYSE:DW), which has counted both bankrupt manufacturers as customers in the past, swung to a loss in the fourth quarter, because of its additional exposure to the housing market.

Perhaps the biggest name in RVs, Winnebago Industries, fared no better. Its second fiscal quarter produced a "dramatic" decline in shipments, causing it to lose $10.4 million, or $0.36 a share. That's worse than the $0.30-a-share loss analysts had been anticipating. Winnebago's CEO figures that sales will remain soft until the credit markets thaw out. He can't be too pleased by the latest report from the Treasury Department, which shows that the biggest TARP recipients have reduced lending even further.

That undoubtedly plays into the CAPS community's bets against Winnebago. Only 31% of the members rating the RV maker think it will outperform the market, with 75% of its All-Star raters giving it the thumbs-down. CAPS member SIP08ISU thinks the company will lag any economic recovery:

If our economy does start to turn around, This stock should be one of the last to follow. It has negative earnings and it is in the recreational vehicle industry which is suffering right now.

Though the stock has bounced off its March lows, Winnebago still needs to preserve its liquidity in these difficult markets. Executives at the company have accepted pay cuts to help the situation, but even the thinning of its competitive ranks may not be enough to keep the RV maker going. When all is said and done, retirees may not have enough left to splurge on its particular kind of rolling stock.

Rattling the cage
Are these companies doomed to drag their investors into an underworld of underperformance? Or will they be resurrected to stalk the markets once again? 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 a stock's CAPS page. Sign up today, absolutely free, and let us know whether you think the Grim Reaper's at the door.

Drew Industries is a Motley Fool Hidden Gems pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey does not have a financial interest in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool's disclosure policy is full of life.