It has been a choppy market lately, but while many stocks are having trouble posting sustained gains only a select few face complete delisting. Major stock exchanges like the NYSE, AMEX or NASDAQ don’t kick companies out just for having a bad few weeks, but eventually will pull the plug if certain minimum standards are not met.
Stocks close to being delisted have moved into that position for some serious reasons — and once shares of a company move to the pink sheets, they often don’t come back. The best recent examples of this are Blockbuster, Fannie Mae, and Freddie Mac
The Nasdaq Global Market requirements for ongoing listing is a good guide to the criteria most companies have to meet:
* Shares must stay above $1.
* If shares trade below that level for 30 consecutive trading days, the exchange can warn the company it must get into compliance (usually within 180 days).
* Shareholder equity must stay above $10 million.
* A company must have 750,000 publicly traded shares. The market value of those shares must be at least $5 million.
* That company must have at least 400 shareholders.
Keep in mind that there are several levels of share listing on the NASDAQ and these rules do not apply to all of them. The exchanges also have some discretion in how the rules are applied and what the terms are for companies to return to compliance.
That said, here are 10 likely candidates for delisting in the near future:
1. Ambac (NYSE: ABK) is certainly a likely candidate to be delisted. Like some other companies that drop off exchanges, the financial stock may not want to pay the fees to stay on the NYSE. Ambac has said several times it is at risk of bankruptcy. Shares of the bond insurance company trade at $0.56, down from $80 in 2007
2. Rite Aid (NYSE: RAD) has been in the stock delisting dead pool for some time. The drug store chain’s shares trade under $1 off and on. The company has lost money in a number of quarters over the last three years. In the most recent quarter, Rite Aid lost $74 million on revenue of $6.4 billion. But the real danger to the firm’s future is its $6.2 billion in long-term debt.
3. Evergreen Solar (NASDAQ: ESLR) is one of a group of several green development companies that were in fashion when crude traded above $100 and President Obama pushed investment in alternative energy. Today, Evergreen sells for $0.64 a share and has been below $1 since mid-May. Eighteen analysts cover Evergreen, with seven rating the shares a “sell” and ten rating the stock as a “hold” That may be because the company has a long record of operating losses and isn’t likely to improve.
4. Orsus Xelent Technologies (AMEX: ORS) designs and makes cellular phones for retail and wholesale distribution in China. It trades on the AMEX, which tends to be more liberal in its listing rules, so ORS may have more time to get into compliance than most stocks on this list. It has traded below $0.75 all year and now changes hands at $0.20 or so.
5. Dynatronics Corporation (NASDAQ: DYNT) designs electrotherapy products for treating chronic pain and acute post-traumatic pain. The company has revenue of only $8 million. Its shares trade at $0.70 and have been below $1 since a sharp sell-off when the market headed south in May.
6. Pacific Ethanol (NASDAQ: PEIX) posted better-than-expected second-quarter earnings, but still could get the boot. The firm produces and sells ethanol. As mentioned before, alternative energy plays have been out of favor as crude oil prices have stayed soft. After a run-up in January shares now trade at $0.59 after the stock crashed in May.
7. eDiets.com (NASDAQ: DIET) is a throwback to the era when investors thought anything could be sold online – including digital weight loss plans and meal delivery. Revenue for the second quarter of 2010 was $5.4 million. The net loss for the second quarter of 2010 was -$34.6 million. Shares in the at-home diet company are changing hands at $0.75. If the company keeps losing money, that price is not likely to rise.
8. StemCells (NASDAQ: STEM) is in the business of research, development and commercialization of stem cell therapeutics. The field is crowded and recent legal challenges to federal funding of stem cell research have made the sector volatile. StemCells trades at $0.80 and has been below $1 since May. Last quarter, the company lost -$4.6 million on revenue of only $244,000 and it can’t last long with numbers like that.
9. PokerTek (NASDAQ: PTEK) trades for $0.55 and has been below $1 since early May. The builder of electronic gaming tables for the casino industry has been public for six years and has never made a dime. For the first six months of the year, PokerTek reported a -$2.9 million loss, or -20 cents per share, on revenue of $3.43 million.
10. Spanish Broadcasting System (NASDAQ: SBSA) trades at $0.82 and has see-sawed above and below $1 for over a year. The broadcaster has $414 million in debt and only $44 million in cash. The debt is a tremendous anchor that could hold SBSA back and ultimately result in delisting.
As of this writing, Doug McIntyre did not own a position in any of the stocks named here.
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