The Stocks will be going to zero

Now "zero" ratings are proliferating. Here are the stocks which are predicted will be going to zero via Business Week:

1. IndyMac Bank (IDMCQ)
   The trend may have started over the summer when some enterprising banking analysts predicted that shares of IndyMac Bank (IDMCQ) in Pasadena, Calif., would go to zero. Bravo to them, since the stock was recently about 4 cents a share.


2. Nortel Networks (NT)
   RBC Capital Markets (RY) analyst Mark Sue slapped a target price of zero on telecommunications-equipment maker Nortel Networks (NT).


3. General Motors (GM)
   Deutsche Bank analyst Rod Lache says General Motors (GM) shareholders will have worthless stock certificates within 12 months.


4. Sirius XM (SIRI)
   Henry Blodgett thinks satellite radio provider Sirius XM (SIRI) is headed for bankruptcy. Analysts at Morningstar (MORN) say the shares of 32 of the 2,000 companies they cover are likely to become worthless.


5. Citadel Broadcasting (CDL)
   According to Morningstar, Citadel Broadcasting (CDL), are in the media industry, where heavily indebted companies are seeing advertising revenues plunge.


6. Mesa Air Group (MESA)
   According to Morningstar, Mesa Air Group (MESA) faces a lawsuit over its operations in Hawaii and could see lower payments from its carrier partners.


7. Decode Genetics (DCGN)
   According to Morningstar, Decode Genetics (DCGN), which uses genealogical records from Iceland to understand genetic diseases, hasn't had any drugs approved by the Food & Drug Administration and could run out of cash.

At Morningstar, the number of companies seen as likely to go out of business has doubled in the past few weeks, and the firm expects the number to rise. Its sector analysts calculate fair value for every stock they cover based on fundamentals, says analyst Matthew Coffina, author of Morningstar's "Most Overvalued Stocks" column. Setting a value of zero "says there's a considerably better than 50% chance a stock will be worthless," he adds.

Coffina says Morningstar isn't advocating that investors sell those shares short, but it wants to warn shareholders who may be hoping for a recovery. "Even selling at 30 cents is a huge return if shares are going to zero," he says.

Sources :

Business Week: Predicting Which Stocks Are Going to Zero, December 11, 2008, 5:00PM EST

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