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What Companies Could Go Under in 2014?

  +Follow December 10, 2013 8:44AM
Tickers Mentioned:

While millions of businesses fail every year in America, the failure of a large publically traded company is a much, much rarer event, with only a few every instance every year. It takes a lot to topple a giant, but that’s not to say it never happens. In the last decade alone, we’ve seen former multi-billion dollar behemoths Enron, Bear Stearns, Lehman Brothers, Kodak, and Blockbuster all go the way of the dodo.

2013 was a bull year, but that does not mean everyone had it good. There are a few companies that absolutely tanked out, and by Dec 2014 could completely cease to be.   

The following companies are major contenders to crap out next year:

Walter Energy (WLT)

Market Cap: $1.01 billion

2013 Performance YTD: -54.27 percent

Debt to Equity Ratio: 3.36

Walter Energy is frankly in an industry with an incredibly murky future. All major coal companies are in varying degrees of trouble, with giants like Peabody (BTU) and Arch Coal (ACI) also experiencing significant losses this year. However, Walter looks to be especially vulnerable, as they carry a debt-to-equity ratio of an incredibly high 3.36, rapidly declining earnings per share, and a P/E ratio of 268.

BlackBerry née Research in Motion (BBRY)

Market Cap: $3.01 billion

2013 Performance YTD: -51.27 percent

Debt to Equity Ratio: 0

Large companies that go bankrupt are quite often ones that were formerly the leader in their field (See: Pan Am, Kodak.) BlackBerry is well-primed to prove that sentiment true, as the original smartphone was once the unquestioned leader in the field. Now, of course, BlackBerry is in a tailspin, and short a white knight swooping in and saving them, they will be out of cash by the fall of 2014, and completely kaput before the end of the year.

J.C. Penney Company (JCP)

Market Cap: $2.12 billion

2013 Performance YTD: -57.23 percent

Debt to Equity Ratio: 2.12

The biggest loser in the S&P 500 in 2013 has had a widely documented fall from grace, starting with the disastrous tenure of Ron Johnson and subsequent failure (so far) to turn things around. Brick-and-mortar retailers are in for a tough ride from here on out, and unless they are able to adapt to the shift to online shopping (as Best Buy (BBY) has done so well) they are potentially looking at the end of an era.

J.C. Penney will always be able to pay off their debt, because those giant stores happen to be sitting on a lot of valuable real estate. But you can’t get to the land underneath all those J.C. Penneys while they’re still alive.   

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  +Follow December 10, 2013 8:44AM



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