For more than a year, we've been chronicling companies that appear to be on their deathbeds. As we note, 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, and Washington Mutual, to name just a few.

We check for stocks that have eked out the lowest possible one-star rating from the savvy investors in our Motley Fool CAPS community. Then pair we that information with various financial ratios, which can flash like a neon sign that the end is near.

With a third of those original companies departed or disappeared, let's take a second look at some of the stocks we diagnosed with terminal ills:


Price at First Appearance

Price Today






Hovnanian (NYSE:HOV)




Lennar (NYSE:LEN)




USANA Health Sciences (NASDAQ:USNA)




Wynn Resorts (NASDAQ:WYNN)












Internet Capital Group




LifeTime Fitness (NYSE:LTM)




Merrill Lynch




*Acquired by Bank of America on Dec. 31, 2008.

Unlike previous trips back in time, in which nearly all of the companies reported lower returns, the group that appeared in late November and early December is now mostly reporting positive results -- some spectacularly so. Homebuilder Lennar has almost tripled, and gym operator LifeTime Fitness has nearly doubled. Of course, Merrill Lynch was infamously subsumed by Bank of America (NYSE:BAC), saving it from certain death. So see whether we can ascertain why some of these companies were able to recover, while others remained stranded at rock-bottom prices.

Whistling past the graveyard
A number of these companies don't seem to have revived their stock prices through any action of their own. Instead, they owe their resurrections to investors' hopes that a general market recovery is at hand. Lennar and Hovnanian, for example, are still reporting big losses, but stabilizing macro factors and limited gains in Case-Shiller numbers present glimmers of hope for both companies.

CAPS member Displacement doesn't dislike Lennar; he just thinks that waiting for the eventual recovery will be a long, hard slog through the mud. PathofGrowth thinks Hovnanian is simply burdened by too much debt to beat the market.

One of the only companies whose share price has stayed level since December is USANA Health Sciences. However, since its shares were nearly cut in half from December to March, only to rebound since, shareholders might want to consider this a win.

This personal-care products company got a big boost at the end of July, when it reported analyst-beating earnings and raised full-year expectations. Despite this, the company continues to carry a lot of negative baggage, and more than half of all CAPS members expect it to still underperform the market. That number rises to nearly 75% when you poll just the All-Star members.

Rattling the cage
We'll be back next week to identify more stocks that are leaving investors feeling ill. In the meantime, you can 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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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 has a disclosure policy.