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Who Will Go Bankrupt Next?

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    Investorplace.com Editor Jeff Reeves breaks down which companies may be on the brink of bankruptcy.

  • Duration 3:35
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Well despite superb brand recognition Blockbuster borders and Circuit City also for the same fate.

Bankruptcy.

Saddled with debt and increasing digital competition -- retailers were forced to close their doors and liquidate assets.

While their fall from grace has ended in May be just beginning for some others -- -- is the editor of investor placed dot comedy joins us right now Jeff.

Do you see any other publicly traded companies on the brink.

Yeah I -- actually having the three big names I think consumers are gonna recognize our Rite Aid.

The drugstore chain -- the -- one of the biggest builders it's out there and the mall jewelry stores tail are out of the three that I watch right now that are in big trouble.

What do you see as yield -- currently used throughout all three of those that make them wouldn't put that in this position.

Well mean that -- a little bit of a different flavor but I think that the overriding theme here is that they just haven't made money a long time all right it hasn't turned a profit since Q1 of 2007.

-- -- -- homes has been deep trouble since early is early 2006.

I think story was sales since 2007 it's only had three profitable quarters so you can't lose money for a long time like that expect stick around.

On and of course there's bigger factors -- specifically I'm happy to talk about.

You know we talk about how -- companies these days.

The big companies have so much cash on their balance sheets they are flush with cash day that they're there and strong position.

But these three companies are not the fact that we haven't made money in -- -- has gotten them as force them to lever up hasn't it.

-- the right is a perfect example I mean fundamentally there is the company has bankrupt is because it just goes too much greater its creditors and if you look at the debt.

Do you asset ratio of Rite Aid on its well north of 75% to be north of eighty back in February it was something like six point one billion dollars in debt.

Vs seven point five I believe in total assets you're really pushing the envelope there -- numbers that large so when you're losing money you have got that big.

I mean something's gotta give and if France doesn't have growth prospects in the future then you know they analyze got -- show -- eventually.

These three companies.

Ride aid pulled the in sales can they restructure and come out of bankruptcy will they will somebody buy them or will they just liquidate all the assets and hope to give their own shareholders and creditors the best healing yet.

Well since we get our work -- Wall Street so we live and on the -- -- rampant speculation so if you -- -- -- a wild.

Play I suppose maybe Wal-Mart has this urban plan -- Obama smaller stores in strip malls.

I suppose they could buy Rite Aid for the real estate that's what Sears and Kmart bought it for the real estate but.

I mean realistically the buzzards are gonna circle are gonna pick the carcass of what they want in the Bankruptcy -- doesn't really make sense in this market for a lot of companies.

The kind of swallow ailing businesses like this whole.

-- just wait for an auction and pick the pieces they want and leave the restaurant with sun.

It's always see -- borders -- -- Books-A-Million just bought a bunch of their retail locations.

That He had to -- is gonna continue.

It any of these three had a chance in your -- which one of the three has the best chance of being able to survive.

Well I mean Rite Aid is pretty much defunct I think because you know retail stocks like that.

Especially right -- -- consumer staple prescription drugs you know and you can make in this -- you're never gonna make it pulled He could theoretically turnaround of housing turns around but.

Mail us rebuild materialistic whereas like the end of the tunnel there yeah I think think for sales young rising commodity cost platinum sub -- up on one and consumer spending is down on the other.

So you know I don't really know there's a lot of places for them to go not a lot I suppose if things improve economically that pulled years and might be able to turn a quarter.

But I mean I think right it's pretty much cut.

Get a frost prospects aren't great Jeff thank you so much Jeff Reeves streamlining great thanks -- shame on me for sitting on that sharper image gift -- but at the.

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