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 sick bay
Don't assume that all such companies are goners. Some
will barely cling to life, while others will make a full
recovery. Here we're seeking companies that have all but
given up the ghost.
For help, we'll turn to the clever coroners at our
Motley Fool CAPScommunity, where 140,000 members give the
thumbs-up or thumbs-down to about 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, then
we'll head over to CAPS to measure the opinions on a
company's prospects.
Then we'll run some quick tests for liquidity. The
current ratio and the 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 filing for bankruptcy protection. Companies scoring
3.00 and above are considered safe, those between 2.70 and
2.99 are "yellow flags," those between 1.80 and 2.70 have a
good chance of filing for bankruptcy within two years, and
those with scores below 1.80 are doing the worst of all.
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
Gray Television (NYSE: GTN)
*
0.9
0.8
0.11
$2.50
Iowa Telecommunication
Services (NYSE: IWA)
*
0.4
0.3
0.64
$12.27
Lee Enterprises (NYSE: LEE)
*
0.6
0.5
0.52
$3.67
Starwood Hotels & Resorts (NYSE:
HOT)
* Continued... |