Ten Stocks Unlikely To Survive 2012 (ALIM, AMR, APP, EK, ENER, FFN, NRTLQ, PNCL, RDDY, YRCWD)

December 30, 2011 by Jon C. Ogg

Calling on the death of a company is no fun task.  Some companies cannot get it right and it is amazing how some companies can hold on to a status as a public company.  24/7 Wall St. has compiled a list of ten stocks which may disappear in 2012.  Some will likely avoid the hangman, while others seem doomed.

The list includes the following still-public stocks: Alimera Sciences, Inc. (NASDAQ: ALIM); AMR Corporation (NYSE: AMR); American Apparel, Inc. (AMEX: APP); Eastman Kodak Co. (NYSE: EK); Energy Conversion Devices, Inc. (NASDAQ: ENER); FriendFinder Networks, Inc. (NASDAQ: FFN); Nortel Networks Corp. (NRTLQ); Pinnacle Airlines Corp. (NASDAQ: PNCL); Reddy Ice Holdings, Inc. (RDDY); YRC Worldwide Inc. (NASDAQ: YRCWD). 

Almost all of these have either had a form of bankruptcy or reorganization, while others have been in the rumor mill for quite some time.  We included a write-up on each, and have even have gone as far as discussing some caveats which could help some of these stocks to survive. There is even a chance that a couple of these could end up being major turnaround stocks.

Alimera Sciences, Inc. (NASDAQ: ALIM) saw a share price implosion take place in November after the FDA all but rejected its eye drug.  We covered this one at BioHealthInvestor with a near 75% drop on the news after being public less than two years.  Shares fell to $1.96 with a $61 million market cap and shares are now at $1.30 with a $41 million market cap.  The good news is that it has no debt overhang and it may be able to scrap operating costs down to nothing.  Still, we cannot see how it can fund itself through another set of trials.  Mathematically it is more than financially challenged, even if the company manages to hang on as a NASDAQ listing.

AMR Corporation (NYSE: AMR) is effectively done already.  We had been expecting an NYSE delisting notice to come for a while, even though there was a time even in the last week of the year where shares gapped up big and traded as though there may be some intrinsic post-bankruptcy value left for common shareholders.  That would not be the normal post-bankruptcy value.  While anything is possible, this one will move to the pink sheets and will trade around with a 5-ticker symbol for a while.

American Apparel, Inc. (AMEX: APP) has so far managed to avoid being delisted and so far managed to avoid a bankruptcy through a shaky history.  Still, things have been sketchy here for so long that even a near-40% jump in shares from $0.57 to $0.75 since its early December business update showed improving store sales metrics.  This company has managed to survive on less than $10 million in cash but still has a net tangible value of $56 million despite a loss in 2010 of $86 million.  Here is the caveat” American Apparel has managed to exist in this diminished state for some time and its controversial CEO has managed to hang on.  Maybe the company can pull a rabbit out of a hat and turnaround.  American Apparel often notes “going concern” as a risk under its safe harbor statements in press releases.

Read Also: Analysts Top Biotech Stocks For 2012

Eastman Kodak Co. (NYSE: EK) has done everything wrong and had everything go wrong that could go wrong.  Antonio Perez has been on our list of CEOs that need to be fired for years now and the company has stuck its head in the sand for far too long.  The bankruptcy rumors have swirled for long enough.  The real value left in the company is in the patents, but the company has not been able to make its patent machine turn into a survival machine.  The KKR board members have also resigned and that could be a sign that the private equity firm will try to force a move here so it can secure whatever value is left. At the end of September when we polled our readers, the poll response was that Kodak was more likely to go bankrupt than Greece.  Ouch.

Energy Conversion Devices, Inc. (NASDAQ: ENER) is one of the first formal deaths in the solar sector, although Evergreen Solar was the first of the long-time solar players.  Shares are now barely $0.22 per share and the old buyout rumors never turned out to be anything more than high hopes. The company’s own description in its press release calls itself “a leading global provider of lightweight, flexible solar products and systems for the building-integrated and commercial rooftop markets.”  Leading?  Where?  Leading the path to zero maybe.  Energy Conversion said in mid-December that it had elected to defer an interest payment to noteholders and noted, “We are continuing to pursue a repositioning of our solar business for future success.”  Sorry, that is the beginning of the end even if this was well over a $50.00 stock during the solar bubble from 2007 to 2008.

FriendFinder Networks, Inc. (NASDAQ: FFN) is a company which should have never been allowed to come public and its underwriters may actually share some liability in a recent class action lawsuit filed.  After pricing at $10.00, the stock now sits under $1.00 and appears to be the worst of all IPOs in 2011 barring any of the Chinese pump and dump accounting fraud outfits.  Apparently porn mixed with social networking is not as good of a combination as the company hoped and it raised far less in the IPO than when it first filed to come public.

Read Also: The Worst Product Flops Of 2011

Nortel Networks Corp. (NRTLQ) is still around as far as a Pink Sheet stock.  The company has dwindled down to nothing other than some patent sales out of bankruptcy and the homepage is effectively a moniker for its “Business & Financial Restructuring” site.  While its latest balance sheet still listed $1 billion in cash, the total “NNI” liabilities “subject to compromise” were more than $5.5 billion.  Would someone finally put the remaining OTC shares out of their misery in 2012? This is a zombie stock if there ever was one.

Pinnacle Airlines Corp. (NASDAQ: PNCL) may be the next airline implosion after AMR.  There is a chance it will hang on, but at $0.85 it has a 52-week range of $0.80 to $8.68 and a mere $16 million market cap.  The only thing that has kept Pinnacle relevant as a stock is that it once had a decent roster of institutional investors.  Shares have been cut in half in just the last few weeks of the year and this worry about the stock disappearing may be more share price driven than anything.  The balance sheet still looks manageable as of September 30, 2011 but additional layoffs are speculated on top of recent worker furloughs.  A brokerage research note from Maxim even recently said it has a high probability of bankruptcy when it started it with a SELL rating.

Reddy Ice Holdings, Inc. (RDDY) has just recently lost its NYSE listing under the ticker “FRZ” on the next to last trading day of 2011 as it moved to the OTCQB.  The NYSE had this as a delisting candidate for some time and it has finally come to pass.  S&P even downgraded the rating from B- to CCC+ in November and left a Negative outlook on the company after a prior similar move from Moody’s. At $0.24, its 52-week range is $0.15 to $3.81 and the market cap is down to $5.6 million.  Shareholders may have to hope for that buyout that seems to have been lost in the shuffle.

YRC Worldwide Inc. (NASDAQ: YRCWD) is a crying shame of a trucking outfit for investors.  The company’s $65 million market capitalization is very misleading when you consider almost $3 billion in debt for its entire enterprise value.  Frankly, we cannot figure any reason this common equity exists at all other than that the company just wants to avoid a total wipe-out for common holders at all costs.  For all practical purposes this has been a total wipe-out.  A stock at $9.,73 does not sound like it is on death’s door to most new investors but the adjusted 52-week trading range is $9.00 to $1,584.00. Reverse stock splits are often doomed to head lower and headed lower it has: it has had two reverse splits in the last fifteen months at 1:25 in October 2010 and 1:44 in December 2011. YRC is effectively a zombie stock.

Again, some of these stocks may survive the year 2012 and maybe one or two can engineer some incredible turnarounds.

I'm interested in the Newsletter