2014 Top Stocks Market, Best Stocks Investment In 2014, Top Stocks For 2014: No surprises here; just look where there's already trouble

Borders Group Inc. (PINK:BGPIQ), like Blockbuster before it, failed to surprise Wall Street as it went under with a whimper. The second-biggest U.S. bookstore chain won bankruptcy court approval last week to liquidate 200 stores in a deal that may bring in $175 million to satisfy its creditors. Borders has been relegated to the pink sheets to die a slow death as aggressive traders bet on which day its stock will finally go to zero.

The strange thing is some folks think this is news. Digital retail stock Amazon.com (NASDAQ:AMZN) had been pummeling traditional bookstores for years even before the Kindle and ebooks knocked brick-and-mortar Borders out altogether. If you polled investors who were paying attention 12 months ago, chances are you would find nearly all of them expecting Borders to suffer in 2011 and more than a few who expected the retailer to bite the dust altogether.

So what stocks are currently stuck in a tailspin and doomed to crash into bankruptcy soon? Nothing is certain on Wall Street � but if you�re asking me to put money on the most likely candidates for Chapter 11, here are three big-name stocks that are in serious trouble and might not make it another year:

Rite Aid

Rite Aid (NYSE:RAD) has a trifecta of problems that it simply cannot overcome: poor reach, poor financials and no hope for growth.

The drug store game is a difficult racket, characterized by high competition and razor-thin margins. Drug benefit plans and Medicare providers are embracing online sales and mail orders to cut costs, so traditional drug stores have to slash prices to keep up. Take Wal-Mart (NYSE:WMT) pharmacies, which offer $4 prescriptions on select drugs. There�s no money in those prices � they�re simply designed to bring in customers who (hopefully) will buy other items when they pick up their meds.

Then you have drug stores tha! t simply snag customers with convenience and keep them coming back month after month. Consider that Walgreens (NYSE:WAG) commands a 20% share of the retail drug store market and claims to fill one of every five U.S. retail prescriptions.

Rite-Aid just doesn�t have the scale to offer lowball prices like Wal-Mart or the reach to turn over the sheer volume like Walgreens.

And it�s only going to get worse�� last week�s announcement that Express scripts (NASDAQ:ESRX) might snap up Medco (NYSE:MHS) with a staggering $29 billion buyout would create a company with a 30% market share of the total prescription drug market.

Rite-Aid is being squeezed out, plain and simple. Unfortunately, there�s nothing the company can do about it. RAD has tallied just a single profitable quarter in four years and continues to bleed red ink. Heavy debt loads, weak same-store sales and no money to grow means more of the same and no ability to change course � so it�s not as much a question of whether Rite-Aid will go under but when. The company�s debt-to-asset ratio is north of 75% and continues to climb.

Rite Aid was trading at around $6 per share before the financial crisis, but now it�s barely above $1. RAD could at the very least get delisted for a paltry share price in the months ahead, and bankruptcy is a serious likelihood.

Pulte Homes

Even the most optimistic investor has trouble seeing the light at the end of the tunnel in housing these days. And the pessimists � well, their only problem is deciding between the housing stocks they think will decline and the housing stocks they think will go under completely.

So what�s up with Pulte Homes (NYSE:PHM)? Very little. Pulte stock is off about -80% since early 2007. And I looked at the past 17 quarters for Pulte, dating to Q1 of its fiscal year 2007, and there�s not a single profitable period to be found.

Admittedly, this Thursday�s earnings report could show Pulte�s first profitable quarter since �06 (presuming it had one � I was only willing to look at four fiscal years and didn�t dig further than �07). And Pulte has managed to keep liabilities reasonably low despite the horrific housing market by laying off workers and slowing construction to a crawl.

But its debt-to-assets ratio is disturbingly high at about 50%. What�s more, Pulte reported it lost almost $1 billion in the third quarter of 2010 � so don�t fool yourself into thinking the company has been in the ballpark of breaking even for the past few years.

Despite the brutal balance sheet, perhaps the biggest strike against Pulte is the fact the Federal Reserve has started grumbling about raising rates sometime in the next year. And even if that doesn�t come to pass, if the U.S. sees a credit downgrade because of the brinksmanship about the debt ceiling, the cost of borrowing will rise significantly. There are enough reasons for people to not move into a new home now � from a lack of job security to plummeting property values � so a higher mortgage interest burden will only turn off more prospective buyers.

If macroeconomic conditions continue to push people away from homebuying in the near term, Pulte might not have the strength to survive until the market firms up.

Zale

Zale Corp. (NYSE:ZLC), the iconic jewelry store that once was a hallmark of almost every mall in America, was trading for as much as $30 per share before the financial crisis. As consumer spending flopped, so did the stock � down to about $6.60 a share currently.

But a 75% flop isn�t Zale�s only problem. The balance sheet of this luxury stock has been just as disturbing as its stock price.

Zale has been losing money for each fiscal year since 2007, though, unlike the previous two stocks, it has had glimmers of quarterly profitability scattered across the last four years. But most disturbingly, reven! ue has b een steadily plunging � from $2.43 billion in fiscal 2007 to $2.14 billion in 2008 to $1.78 billion in 2009 to $1.61 in 2010. Not an inspiring trend. The company is hoping to reverse that trend this year, but we�ll see.

The ugliest statistic I stumbled across was from an S&P database that plots the company�s growth over the previous five years at an ugly -93.1%.

That�s not the kind of momentum you want to be on the wrong side of. Some of the losses were a necessary product of economic troubles, but that doesn�t tell the whole story. In 2008, Zale closed 105 locations � 12% of its previous total. Then ZLC stock execs panicked as things didn�t improve and cut deeper, shuttering an additional 191 stores for an additional 25% cut.

Those cutbacks have helped a bit, and Zale might not be on the edge of failure at this moment. But compare it with two very different competitors � Blue Nile (NASDAQ:NILE), an online jewelry discounter, and luxury icon Tiffany & Co. (NYSE:TIF). Both are soundly profitable, and neither recorded so much as a quarterly loss in the last four fiscal years, let alone a full-year loss.

You could argue that consumer spending hasn�t bounced back and high-priced jewelry just isn�t on the wish list of many Americans. But clearly there are bigger issues at work that are weighing down Zale. If the company doesn�t find its way soon, it could be squeezed out of the market by both the macro trends and by profitable competitors like NILE and TIF that have managed to grow revenue and profits even as Zale stumbles.

Jeff Reeves is editor of InvestorPlace.com.�As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.

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