Turnaround investors recognize the opportunity in a battered stock well before the rest of the market and want to pounce immediately. But even if the fundamentals look attractive and there is a margin of safety in the valuation, the stock can still decline--sometimes substantially.Read More
When a company faces both cyclical and secular problems, a turnaround may be impossible.Read More
It can be tempting to look at a depressed stock and think, “it used to trade at 40 and now it’s at 8 – therefore it must be a bargain.” Unfortunately, the fact that a stock once traded at a higher price does not guarantee that it will ever get back there. One big reason that a stock trades so much lower than before: its earnings potential or assets have deteriorated. Without some fundamental improvement, the share price will continue to lag, or worse.Read More
One common stock market pitfall can be mistaking a low-priced stock for being cheap. Many stocks trade at low prices, say under $5 per share; but this is no indication of real value--or whether it’s a bargain. What really matters is what shares are worth.Read More
Excerpted from the August 2016 Issue
There doesn’t seem to be much incentive to go public these days. This trend seems likely to continue. What is less clear is the impact: Do valuations increase for the remaining public companies as the supply diminishes? Will individual investors have less access to the best new companies? What will happen when interest rates rise and close off the spigot of cheap money driving private deals?Read More
Most investors think of bankruptcy as bad. As a result, they tend to avoid the stocks of companies that have been through a U.S. Bankruptcy Court restructuring, but Chapter 11 can be very beneficial to a company and its post-bankruptcy stock.Read More
Negative media headlines can be a great source of turnaround ideas. Stories about struggling companies, management turmoil, failed strategies, large financial losses, industrial accidents, lawsuits and the like can drive a stock to well-below reasonable levels and may provide a buying opportunity. Like all Wall Street axioms, however, “buy on bad news” must be accompanied by careful analysis to evaluate the potential for turnaround success.Read More
The stronger a company’s cash flows are relative to its obligations, the greater its chances for recovery. If cash flows exceed its obligations, the company has resources and time. If, however, cash flows barely match or fall short of its obligations, the company fights not only its operational challenges, but also fights the clock.Read More
Excerpted from the July 2016 Issue
So, where do we go from here? With the S&P 500 Index having already exceeded the 3% return we anticipated in our January issue, we have modest expectations for the rest of the year. Valuations for large-cap stocks remain high, and earnings growth looks tepid. Stocks with “low volatility” and stable earnings appear particularly expensive to us. Smaller-cap stocks, value stocks and those with unique situations continue to look much more appealing. In general, we expect the U.S. economy to...Read More
It is essential for a turnaround company to maintain a steady level of sales to provide the cash flow and time span needed to carry out its recovery plan: If revenues remain stable, there is a high probability that the turnaround will eventually succeed. Read More
Learn George Putnam's Turnaround Secrets
Turnaround Investing Blog
Investors have newfound enthusiasm for domestic economic growth, as a Trump presidency could bring new infrastructure spending, lighter regulatory burdens and lower corporate taxes. While the distance between campaign promises and corporate profits can be vast, we agree with the market’s general assessment of how government policies might change.
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:
* Bristow remains in our active portfolio (currently as a Hold), and 2,057% gain is as of 11/9/16.
Bet on These Battered Stocks
Chicago Tribune highlighted this Kiplinger's Money Power write-up on George's contrarian investing approach and The Turnaround Letter's April 2016 monthly turnaround stock pick.
Darren Fonda notes, "…besieged stocks often start to recuperate as the headlines fade and investors anticipate a return to precrisis sales and profits. The trick, of course, is to find companies that are more likely to rebound from a setback than collapse entirely."
Learn more about Putnam's turnaround investing strategy.
Copyright © All Rights Reserved.
Design, CMS, Hosting & Web Development :: ePublishing.