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George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

Mid-Year Stock Market Update: "Near Record Highs" But It Doesn't Feel That Way

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...
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Look for Well-Known Products to Boost a Potential Turnaround

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.
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Market Conditions Deeply Impact Turnaround Stocks

The best environment for turnaround stocks is when the economy is just beginning to improve after a slowdown. As broad economic conditions improve, the weakness of turnaround companies can become their strength as they benefit much more than healthier companies. Their sharper recovery can lead to outsized share price gains relative to other stocks.
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Focus on Core Business Operations

Selecting a turnaround stock with solid profit potential can almost be considered an art form in itself. As noted in our other distressed investing blog entries there are many factors to evaluate to determine the real possibilities in any turnaround situation, and here is one more: Look for solid core businesses.
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Watch for Senior Management Changes

Turnaround investing can be very profitable, but how do contrarians go about selecting the most potentially lucrative opportunities? One proven technique is to watch for management changes. Just as real estate experts say there are three keys to success in real estate, we believe there are three keys to success in turnarounds: management, management, management.
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Will They or Won't They Raise Rates? Don't Pay Any Attention to the Noise

Excerpted from the June 2016 Issue
For what seems like the umpteenth time over the last several years, investors – in both stocks and bonds – are once again focused on the questions of “Will the Fed raise interest rates? When? And by how much?” The stock and bond markets often react quite sharply to whatever the “expert” view is on any given day.
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Comparing Stocks and Bonds

While the common stock of a turnaround candidate usually has the greatest upside potential, other classes of securities, such as bonds or preferred stock, may offer attractive profit possibilities with less risk.
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Look for Special Problems that Do Not Affect the Business

Sometimes a company will struggle because of an isolated problem that is not related to its core business prospects. Litigation is a common example. When an otherwise healthy company becomes encumbered with a potentially major liability, management gets distracted and investors flee. A mighty battleship can’t escape its anchor. However, if the company can resolve this problem its stock and bonds may advance sharply and present a potentially lucrative turnaround investing opportunity.
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Who Owns The Stock?

Year after year, many of the biggest winners on Wall Street are struggling companies that turn themselves around and return to favor with investors, but not every laggard is going to turn into a success story. You can improve your chances of spotting a successful opportunity by following some basic rules that apply to almost all turnarounds.
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Traditional Retailers: Will Brick-and-Mortar Stores Disappear?

Excerpted from the April 2016 Issue
Our answer is “No, at least not for many decades,” but many investors appear to disagree. When some retailers posted disappointing results last autumn, many retail stocks dropped 40-50% from highs set only a few months earlier.
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Learn George Putnam's Turnaround Secrets

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Patience May Be A Virtue--But Know When It's Time to Move On

There is no easy way to determine how much patience is appropriate; but if your turnaround is well into its fourth year without meaningful progress, it could be time to move on. 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:

* Bristow remains an our active purchase recommendation, currently as a "Hold," and 1,928% stock profit is as of 8/11/16.

Retail Turnaround Trio

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MoneyShow.com interviewed George to learn more about his favorite value stock picks for today's market. In "Retail Turnaround Trio," Steve Halpern highlights three of The Turnaround Letter's recently-profiled retailers: JWN, TIF and SPLS.

 

Putnam notes, "Well the retailing sector is undergoing very fundamental change as people move away from the bricks and mortar mall doors to buying more and more online but that's not going to wipe out all of the old-fashioned retailers. Starting the middle of 2015, investors just moved away from retailers en masse and a number of them are trading at about half the level they were a year ago. We thought some of the higher quality names that definitely will be survivors looked interesting."

 

Learn more about these three retail stocks poised for a turnaround.