Companies in this type have one or more of the following characteristics:
Negative earnings combined with declining revenues and/or cash flow
High debt and low debt coverage
A tiny price/book ratio
A Chapter 11 bankruptcy filing or a qualified opinion entered by an auditor
Companies whose revenues are growing faster than 50% are excluded, since these are typically young companies more appropriately classified under Speculative Growth. We include declining cash flow in the criteria to eliminate companies whose earnings may be falling because of certain accounting conventions, but that may otherwise have solid operations.