Besides making specific “Buy” recommendations, The Turnaround Letter is constantly discussing companies we feel have real turnaround potential. George continually scans the horizon--identifying turnaround opportunities to uncover undervalued securities. With these tried and true techniques, The Turnaround Letter offers George's unique insight on why a group of companies or a specific investment vehicle would work so well for the committed turnaround investor.
These articles identify companies and sectors with real turnaround potential:
“Small Caps with Big Rebound Potential”: While much of the stock market is quite efficient--meaning information is well distributed, and so it is hard to get an edge and out-perform--there are certain niches that are less efficient. As we’ve often said, turnaround stocks represent one of those inefficient niches because they require a mindset that most mainstream analysts don’t have. Small capitalization stocks can also be less efficient. Their small size and lower levels of trading liquidity make them impractical for large investment funds to own, and so there are fewer analysts following them. If you combine these two sources of inefficiency, it stands to reason that small-cap turnaround stocks should be particularly inefficiently priced. Since inefficiency usually equates to abnormally high return potential, that makes these stocks particularly interesting. “Small Caps with Big Rebound Potential” explores this inefficient small cap niche to reveal 8 stock picks with solid businesses, decent balance sheets and good rebound potential.
“European Banks: Still Risky but Good Gain Potential”: One of our favorite sayings is “Buy when there is blood in the streets,” which is attributed to Baron Rothschild in the early 1800’s. It is particularly appropriate to pull out the Baron’s statement now because he was a member of one of the most prominent European banking families, and the European banking sector is one of the bloodiest areas in the worldwide financial markets today. This article discusses ongoing turnaround investment opportunities to be found in the Eurozone and reveals ten very large, European-based banks with global reach and promising potential—despite their inherent risk.
“Private Equity Stocks: Laggards in the Public Market”: In the June 2012 issue, we commented that initial public offerings often disappoint investors over the longer-term. One of the groups that has proven to be most disappointing to IPO investors in recent years is the private equity sector. These firms garnered big profits and major headlines as private companies only to largely fizzle after going public. Just ask someone who bought Blackstone’s shares on its much ballyhooed IPO at $31 per share in 2007—the stock now trades around $14—or who bought Fortress Investment Group when it went public at 18.50 also in 2007—it’s now below 4. “Private Equity Stocks: Laggards in the Public Market explores private equity firm investing opportunities—especially in light of potential Congressional tax law tweaks—and reveals eight solid private equity firm stock picks.
“A Likely Election Winner: Television and Radio Stations”: While we do not recommend changing your allocation to stocks based on the Presidential election cycle, you may want to consider the effect that the election will have on particular stocks or sectors. One industry group that is sure to get a boost from the election cycle is broadcasting. One analyst has predicted that $4.9 billion will be spent on political advertising for the 2012 elections. The bulk of this ad spending will go to television, but radio and other media will get their share as well. This Turnaround Letter article offers up nine broadcasters likely to profit from the heated quest for The White House.
“Profiting When Housing Rebounds”: We are starting to see a few signs that the residential housing sector may be beginning to rebound from its long downturn—or at least signs that it may be bottoming out. As a result, many of the stocks related to homebuilding have begun to perform better. Despite good moves in many of these stocks in recent months, we think the upturn is just beginning and there is plenty of gain potential left in these stocks. While not enthusiastic about the stocks of the homebuilders themselves, The Turnaround Letter does see potential in other companies whose results will be strongly affected by a real estate upturn, and this article reveals nine potential turnaround stock opportunities.
"Value Compression: Springboard to Future Gains?": The Turnaround Letter's recommendation of Johnson & Johnson got us thinking about other high quality companies that have suffered from “valuation compression” over the last decade or so. Valuation compression refers to a change in investor perception that reduces the valuation multiples that people are willing to pay for the stock. In other words, a stock that used to trade at a relatively high price-to-earnings ratio, now trades at a relatively low P/E ratio, even though there has been little change in the company’s business prospects. It turns out that there are a lot of good companies out there whose stocks have suffered from this phenomenon. This Turnaround Letter article explores the causes of value compression and recommends 10 high quality, industry diverse potential turnaround investment opportunities.