Dying companies should exhibit falling revenues and profitability. I also look for companies with large debt as this could be a catalyst for a collapse, especially in a tough credit environment like today. Its important though to look at cash flow also. Some of these companies have large amounts of depreciation. If they don’t need commensurate investments going forward, then net income can make things look worse than they really are.

R.R. Donnelley & Sons (RRD — 27.8)
Provides print and print-related services. Sales have actually risen from $8.4 in 2005 to $11.5 billion in 2007, though income fell in 2007. 90% of the sales growth came from acquisitions (see 10-K) and 2007 profit fell on large non-cash write-offs. Seems acquisition and consolidation is a big part of strategy and yet the 2007 write-off was due to an earlier acquisition.

On the other hand the company is profitable and is forecasting earnings of $3.05-3.18 for 2008.

Standard Register (SR — 11.32)
Falling sales, low profitability and high debt (ref).  This looks like a good short candidate.

Deluxe Corp (DX — 16.51)
While profitable, DX has falling revenu and OODLES of debt.  One slip up and these guys are toast.  They just lowered FY2008 EPS to 2.52-2.62.

Ennis, Inc. (EBF — 16.51)
In addition to its traditional business forms business, the company manufactures…activewear.  Says it all for the business forms industry.

CSGH (1.20) China Sun Group High-Tech Co
Recommended by a poster.  Earned .13 for FY2008.  Low PE for a growth story if a growth story.  I’m not familiar with their business.  What always worries me about tech cos is someone invents something better.

Other:
- no net debt

Their blurb:
China Sun Group High-Tech Co., (“China Sun Group”) produces anode materials used in lithium ion batteries. Through its subsidiary, Dalian Xinyang High-Tech Development Co. Ltd (“DLX”), the Company primarily produces cobaltosic oxide and lithium cobalt oxide. According to the China Battery Industry Association, DLX has the second largest cobalt series production capacity in PRC…DLX owns a proprietary series of nanometer technologies that supply state-of-the-art components for advanced lithium ion batteries. …the Company plans to create a fully integrated supply chain from the primary manufacturing of cobalt ore to finished products, including lithium ion batteries.  http://www.china-sun.cn.

Also thinking about shorting AIG.  Seems the news is out, but could it get worse?

HK (33.79) Petrohawk Energy
These guys own a bunch of property in the hot Haynesville shale nat-gas formation.  ML put out a report estimating their NAV at $51 with nat gas at $7/Mcf.  ML has EPS of $1.25 and $1.63 for 2009 and 2010.  Lehman has .90 for 2009.  Either way the growth prospects come with highish PEs.

ACY (12.88) AeroCentury
The stock are coming back after a good 2Q report of .99 EPS.  The big worry here is credit worries in small airline lessees (though they are not leasing to American or United).  Lower fuel costs should help.  Maintenance fluctuates alot, which killed the first quarter and took the stock down to the 8s.

Hard to say if this is a growth story.  They added planes earlier this year, but may be slowing down.