The Turnaround Letter

July 2017

Volume: 32
Edition: 1

Stock Pick & Stock Sales

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Time to lock in stock profit.

Sale Recommendation - July 2017

This stock’s results have improved to the point where its stock valuation is now comparable to its peers.
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While this value stock offers considerable upside potential, it also carries significant risk.

Purchase Recommendation - July 2017

This small-cap stock pick disappointed investors almost from its first day as a public company, yet the Company has a lot of contrarian investing appeal: First, the accumulation of black marks has completely soured investors, leaving its shares trading at only 6.4x current year EBITDA. Further, its balance sheet and positive cash flow give the Company plenty of time for the fundamentals to rebound. Moreover, the Company continues to aggressively improve its cash flows in the face of its 62% revenue decline since 2014 and its positive free cash flow appears to be sustainable. With its considerable financial and operating leverage, this value stock is well-positioned to benefit from several opportunities.
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Turnaround Investing Articles

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As contrarian investments, these stocks have real appeal.

Coal Stocks: The Most Hated Sector?

The coal mining companies are among the most out-of-favor companies in the stock market today. We believe this sector’s future prospects are not nearly as grim as most investors believe, and so the stocks now trade at enticing valuations. This article details a number of publicly-traded coal companies that could reward contrary-minded investors. Several are limited partnerships, which are taxed differently--at both the corporate and investor levels--compared to common stocks.
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It seems that Amazon Fever is reaching new heights. 

Will Amazon Take Over the World? Not Quite.

Amazon certainly is impressive; but, realistically, not every industry will be challenged by their profit-draining expansion, nor will every product be sold at large discounts on amazon.com. In this article, we explore a brief selection of companies that would probably be among the last ones to succumb to Amazon Fever. Each has traits that are well outside of the Amazon model, are out of favor and have some interesting turnaround aspects.
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Turnaround News & Updates

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Learn & Avoid These 10 Common Mistakes

Free Report: Turnaround Investing Mistakes

Turnaround Investing Blog

Turnaround Investing Blog

A Closer Look At Two Activist Campaigns

Watch to see if ADP’s CEO Carlos Rodriguez inadvertently helps Pershing, and his aggressive and sometimes personal stance against Ackman could backfire. Overall, because of the stock’s strong returns and Ackman’s weak credibility, we would give this activist campaign a low chance of making ADP a successful turnaround investment. For turnaround investors, the Trian campaign appears to have a win-win opportunity for investors--either Peltz joins the board and learns enough to re-invigorate P&G, or loses and management must either execute (boosting earnings and the shares) or they will face a more drastic proxy campaign with higher odds of success down the road. We think the P&G campaign could turn out well for shareholders.  Read More.

Warrants: A Solid Investment Opportunity

Warrants provide a valuable tool for the savvy investor. When selected and implemented well, they can be a smart addition to a diversified investor’s portfolio. Like options, warrants are not equity. They only convey the right to buy equity. As such, neither holder is entitled to dividend rights, pre-emptive rights, proxy voting or any share of any liquidation.

 

Value Investing

 

Warrants' return potential can be very high, but they also carry significant risks. Learn what they are, how they work, strategies to minimize risk and find profit with warrants.

Here's Why You Should Invest in Asset Managers

 

stock market advicex

 

This Forbes article cites a recent MoneyShow write-up that recommends investors take advantage of the strong stock market and potential interest rate hike by "putting some of your investment assets into the shares of asset management stocks."

 

The article praises The Turnaround Letter's OAK purchase recommendation and quotes George Putnam: "As the corporate debt binge that we’ve experienced since 2009 comes to an end, Oaktree will benefit from a growing number of restructurings and bankruptcies."  

 

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