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. Revenues dry 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 fully
recovery. Sure it happens, but here we're seeking companies
that have all but given up the ghost.
For help, we'll turn to the clever coroners at our
140,000-strong
Motley Fool CAPScommunity, 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 one-star ratings, but
we'll head over to CAPS to measure their opinions on a
company's prospects.
Then 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, and 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, with our
primaryscreen being those stocks that CAPS investors
have given one-star status to, are these companies only
mostlydead, or have they already given up the
ghost?
Stock
CAPS Rating
Current Ratio
Acid-Test Ratio
Altman Z-Score
Recent Price
Alico
*
4.1
2.7
2.64
$28.94
Bon-Ton Stores (Nasdaq: BONT)
*
2.0
0.1
2.14
$8.12
Carnival (NYSE: CUK)
*
0.4
0.3
2.09
$34.79
Krispy Kreme Doughnuts (NYSE:
KKD) Continued... |