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George Putnam, one of the country's leading turnaround and distressed investing professionals, answers your investing questions. This is your chance to find out everything you wanted to know--but were afraid to ask--about turnaround investing.

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How important are Price-to-Earnings (P/E) ratios in evaluating turnaround stocks?

Price-to-Earnings ratios are probably the most widely used tool for comparing the relative values of different stocks. However, they are often less significant for turnaround investors. One reason for this is the fact that many turnaround stocks don’t have any earnings to plug into the P/E ratio calculation because they have been losing money prior to the commencement of their turnaround. And even when a turnaround company has begun to show earnings, the level of those earnings may still be quite low, which leads to a misleadingly high P/E ratio. The one circumstance where I do find P/E ratios helpful is where a company has a very low P/E ratio compared to its peers. This may indicate that Wall Street may have given up on the company--depressing its stock price and increasing the gain potential.

(Question submitted by Wendy M.)

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Distressed Investing: How to Handle Emotion & Realize Outsized Gains

As the range of potential outcomes for a distressed security is wide, the path to the endgame is uncertain and the timing can be protracted, it is easy to let your emotions drive your strategy. Once you’ve made the decision to invest, the waiting--doing nothing--is the most difficult part. Read More.

Market-Beating Profit: The 200+ Club

Turnaround stocks present a unique opportunity for savvy investors to buy in at bargain prices. Take a look at this list of just a few of our purchase recommendations that have realized a return rate of 200% or better:

Value Investing Stock Profit

* Bristow remains in our active portfolio (currently as a Hold), and 2,320% gain is as of 4/11/17.

Five Struggling Stocks That Will Turn Around

 

stock market advicex

 

Kiplinger points out that despite the post-election stock market surge, not all stocks have benefited from the uptick: "More than 100 issues in the S&P 500 have fallen in price this year, including dozens that have slumped by more than 10%....Yet these stocks won’t all stay in the dumps forever. Some will mount a comeback in 2017, making it an opportune time to try to identify the best candidates."

 

Quoting George Putnam, Kiplinger details five value opportunities for the new year.

 

Learn more about Putnam's investing success with turnaround stocks.