Deathbed Stocks Revisited

Over the past year, we've been chronicling companies that seem mere inches away from going six feet under. As we've noted, not every company will give up the ghost. But since our 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 (now half of Sirius XM Radio (NASDAQ:SIRI)), to name just a few.

To compile our ghoulish list, we check for stocks that have earned a minimum one-star rating from the more than 130,000 savvy investors in our Motley Fool CAPS community. Then we pair that information with various financial ratios that signal the Grim Reaper's approach as clearly as a pack of circling vultures.

Let's look back at some of the stocks we previously deposited at death's door:

*Filed for bankruptcy on Jan. 24, 2009.

Over the months since these companies first appeared, Nortel Networks filed for bankruptcy, while newspaper publisher Lee Enterprises hangs on by the slimmest of margins, in the hopes that some new plan saves the industry.

Whistling past the graveyard
Living well is said to be the best revenge; similarly, successful proofs of concept could be the best retorts for critics of your company. Raser Technologies is hoping it can survive the credit crunch to show up those who mocked its geothermal-power efforts as no more than smoke and mirrors.

Raser has a couple of irons in the fire to stoke its future growth. It develops both geothermal power and alternative forms of energy to power extended-range plug-in hybrid vehicles. Its 10-megawatt geothermal plant in Utah recently began delivering electricity to power 7,000 homes in Anaheim, Calif. Utah's governor has also signed bills to help companies tap the state's vast geothermal resources, demonstrating that Raser has the potential to get things done.

The unveiling of a prototype plug-in hybrid version of General Motors (NYSE:GM) Hummer, however, is less remarkable. Sure, SUVs are a popular choice of car buyers (at least when gas isn't hovering at $4 a gallon), but the automaker is already doing away with the Hummer model and killing other next-generation big SUVs like the Tahoe and Suburban. When GM's already having difficulty selling low-priced fuel-efficient cars, allocating scarce resources to expensive, hulking machines like a Cadillac Escalade or a Hummer that will "go green" at just 20 mpg doesn't make any sense.

Yet much of Raser's business depends on access to capital, and the ability to finance construction of facilities. At the end of last year, it had only $1.5 million in cash available, while its operating activities consumed nearly $23 million for 2008. The dearth of credit in the market could make future successes for Raser tough to come by.

CAPS members are pretty evenly split on whether Raser will outperform the market, but All-Star members are decidedly against it, by a four-to-one ratio. AceBull isn't persuaded by Raser's achievements, and thinks it is waiting to implode:

Let us see here. First off the Current ratio is at .11! The book share is at .10 Meaning that this stock is wayyyyy overbought. Net profit margin is at -24,397.09% Based on my stock screener. EPS is -0.79. Company will go bankrupt unless a miracle can happen. PULL your money out.

Rattling the cage
We'll be back next week to identify more stocks that are leaving investors chilled to the bone. 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.