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 that 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 to name just a few.

What we do is check for stocks that savvy investors in our Motley Fool CAPS community of more than 150,000 members have given the lowest rating -- one star -- and then pair that information with various financial ratios that flash like a neon sign that the end could be near.

Now that a third of those original companies have gone under or otherwise disappeared, lets take a look at some of those stocks that were deemed to be on their deathbeds.


Price at First Appearance

Price Today

% Change

Centennial Communications




Darden Restaurants (NYSE: DRI)








Jarden (NYSE: JAH)




Life Partners Holdings



14.81% (Nasdaq: PCLN)




Pennsylvania REIT (NYSE: PEI)




Pre-Paid Legal Services (NYSE: PPD)




California Pizza Kitchen




MI Developments




*Centennial Communications was acquired by AT&T (NYSE: T) on Nov. 6, 2009.

This month, as we check back on our candidates, we see that this was not a good time to short the market. In fact, despite our having some success over the course of this series in picking out companies that are in danger, it's difficult sometimes to go against the grain, particularly when the government is driving so much money into the economy to prop stocks up. So let's look a little more closely to see if we can ascertain why one of these companies was able to recover while others with seemingly similar dire outlooks could not.

Whistling past the graveyard
Perhaps one of the most striking reversals was, whose name-your-own-price model struck a chord with travelers. When airlines, hotels, and car rental companies were all struggling to survive in the teeth of the recession, it might seem counterintuitive that should thrive. Yet it's precisely because those industries were struggling that the online travel agent was able to succeed so spectacularly.

Hotels, particularly in Europe, were having difficulty getting rooms booked as people were opting for a "staycation," so they had a ton of inventory they were able to offer at a discount. Same for airlines with empty seats and rental companies with cars collecting dust on the lots. With so much inventory available to it, could generate incredible deals, which travelers took advantage of.

Last quarter, reported revenue growth of 33% overall, but its international segment soared by more than 60% without the benefit of favorable currency exchange rates. Gross travel bookings in the international segment jumped 70% in local currencies.

With double-digit growth rates forecast for the next five years, and excellent returns on equity, CAPS member hawk109 saw last December as continuing to book generous returns:

Priceline has good numbers and positive earnings estimates for this and the next quarter. The ROE is 45% and the net margin is 20%. A 19% estimated earnings growth rate projected over the next five years with a debt to equity of just 0.07 and a current ratio of 1.54.

It's still going up against some weak comparable numbers for the next few quarters, so it should be able to post some generous numbers again. But once the company begins to lap those low figures generating similar eye-popping results might not be as easy.

Take off with your views on the CAPS page and let us know if this deal makes sense.

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. is a Motley Fool Stock Advisor selection.

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.