Recommendation Updates

Follow the latest news on active Turnaround Letter purchase recommendations.

Automobiles & Components / Small Cap

Midas Notice Received, Alternatives Review Confirmed

On January 6, 2012, Midas, Inc. (NYSE: MDS) announced that it received notice on January 3, 2012, that its European licensee, MESA S.p.A., had filed suit in the Court of Appeal in Milan, Italy, claiming that Midas is in breach of the 1998 license agreement and agreement for strategic alliance (ASA) under which MESA operates the Midas automotive service business in Europe. The complaint alleges that Midas is in breach of these agreements due to, among other things, Midas’ alleged failure to cooperate with MESA to improve the Midas System. MESA seeks damages for the alleged breach of up to €5,782,000, representing a portion of the royalties MESA paid to Midas for the period from June 2009 through October 2011. MESA also seeks a declaratory judgment suspending MESA’s obligation to pay 80% of its future royalty payments owed to Midas under the license agreement. Midas believes MESA’s claims are without merit and intends to vigorously defend against them. MESA had previously filed a request for arbitration in June 2009, alleging that Midas had breached its obligations under the ASA. In a March 2011 ruling, the arbitral panel denied MESA’s claim for the return of past royalties paid to Midas under the license agreement and instead awarded damages to MESA solely with respect to Midas’ alleged failure under the ASA to cooperate in the improvement of IT systems for the European operations. Following the conclusion of the arbitration, the license agreement and the ASA between the parties remained in full force and effect. Feldman also confirmed that the review of strategic alternatives by a special committee of the company’s Board of Directors is ongoing. Midas has not yet determined what effect the complaint filed by MESA will have on this ongoing review. Midas said it would have no additional comments about the review of strategic alternatives until its board of directors approves a specific course of action.

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Is there value in bankrupt PG&E’s stock?

In nearly every case, the shares of a company in bankruptcy become worthless. In very rare cases, however, they can become great investments. W.R. Grace (NYSE:GRA) shares produced a 75-fold return, as an example. With California utility PG&E (NYSE:PCG) now in bankruptcy, the range of possible outcomes for its equity is wide.

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EV/EBITDA: What Is It & Why Are We Using It More?

In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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Turnaround Letter Stock Pick Named Top Performer of 2017

 

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What Last Year's Top Stock Pickers Are Buying in 2018

 

This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.

 

George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."