NII Holdings Reports 3Q17—Buying Time While Operations Struggle
NII Holdings reported a cash operating loss in 3Q, but only $22 million in net cash outflows (cash burn). We believe NII’s overall strategy to sell its highly valuable Brazil wireless spectrum and other assets to one of the other operators at a substantially higher price than the current share price implies. The company’s assets could be worth well north of $5/share. However, their stand-alone wireless business does not likely have much if any fundamental value, given their precarious operating position in a highly-competitive Brazilian market and their on-going cash burn. We consider an investment in NIHD shares to be speculative. Investors retaining their shares should be willing to accept potentially sizeable losses in exchange for the possibility of substantial upside. Investors not willing to accept this risk should exit their NIHD positions.Small Cap Telecommunication Services
Identify & Profit from Distressed Investing
Turnaround Investing Blog
At first glance, the shares have decent appeal as a turnaround investment. Looking deeper, however, the fundamentals are not as strong and stable as they appear. Surplus cash flow is tight, a key driver is weakening, it is increasingly reliant on China and has other nagging issues. We don’t see the new CEO as a catalyst for change. Despite the “first glance appeal”, Tupperware isn’t a good fit as a turnaround stock.
Comparing Stocks Vs. 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. Many turnaround companies have only one class of securities available to investors but where there are different classes to choose from, it can pay to do a little extra analysis of the various options.
Turnaround Letter Stock Pick Named Top Performer of 2017
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."
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