While investing in any energy-related company in the current environment involves risks, this small cap appears to have a sufficiently strong balance sheet to at least survive and likely prosper. It had the foresight (or good luck) to raise new debt last April before oil prices plummeted. Moreover, at the end of December, this stock pick held cash roughly equal to its long-term debt--and it has no significant debt maturities before 2019.
Many of the radio companies are doing a good job of cutting costs and creating synergies by delivering the same programming in multiple markets. Because radio stations require little in the way of capital expenditures they can generate healthy cash flow. With their small market capitalizations, many of the value stocks discussed in this article could be acquired for what is almost petty cash to some of the huge media companies.
Recently, investors have been pouring into certain stocks that pay dividends, particularly utilities and REITs as bond substitutes, since actual bond yields are so low. That has pushed the prices of these bond substitutes up quite a bit over the last year or two, and we think they may be vulnerable when interest rates finally do begin to rise. The turnaround stocks in this article have performed less well recently, but have the potential to begin showing positive fundamental improvement in the not-too-distant future. In the meantime, they are paying relatively generous dividends.
Most investors remember the severity of the 2009 market nosedive: The Dow's final closing price on March 9, 2009 was just 6,547.05, and the S&P 500 dropped to just 676.53. Looking back now with six years of hindsight under our belt, we recently took a look at some of the stocks that have significantly lagged over the six-year period since the March 9, 2009 low point for some unique value stock opportunities.
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George Putnam has always followed the same straight-forward and highly-profitable investment philosophy. He published his first Turnaround Letter issue back in 1986, and readers have seen extraordinary long-term stock profit ever since.
In fact, 12 of 2014's 13 closed-out purchase recommendations saw gains--with five of those enjoying total returns greater than 100%. The Turnaround Letter's average return for 2014's stock picks is +82%: