Boeing's 111% one-year return has left three of the fabled FANG stocks in the rearview mirror, with Netflix's 114% return only narrowly beating BA shares. Boeing's gains haven't been fueled much by the company's fundamentals, but rather by expectations for clear skies in the foreseeable future. The business cycle has yet to be repealed. Cloudy skies eventually will re-appear, and gravity's renewed effect on BA shares could be unpleasant.Read More
Excerpted from the January 2018 Issue
With all the humility that any outlook requires, we can make an easy case for more stock market gains in 2018, as nearly every indicator points in this direction: Low interest rates, strengthening economies and more stimulus from the United States’ landmark tax law should foster more earnings growth and provide an overall supportive environment. But as contrarians, we see this view as being widely held and at risk of becoming the “only” view.Read More
In an era of short attention spans, 280-character tweets and investing fads like bitcoin, a top-quality book (made from actual paper) can make a wonderful and enjoyable gift. This list of high-quality reads includes great ideas for any investor. Most are considered classics, some written decades ago and others more recently. Nearly all of these titles have been read (at least once, many with margin notes) by the editors and staff of The Turnaround Letter.Read More
Specialty snack maker Amplify Snack Brands (BETR) agreed to be acquired by Hershey’s for $12/share, a 71% premium over its prior closing price. We highlighted Amplify as a strong turnaround candidate in October at its then-current price of $7.23.Read More
MoneyLife Radio's Chuck Jaffe interviews George for insight into the "specific methodology" and "discipline" behind his contrarian investing approach. Putnam discusses the troubled energy and retail sectors--with particular emphasis on what separates Macy's from Sears: M has solid assets, management and cash flow while "we're not quite sure" how SHLD can solve its mounting challenges. George emphasizes the need for investor patience in a turnaround situation, pointing out that a solid turnaround stock prospect "needs new management, assets, improved cash flow or something else that will eventually allow the stock to level off and then rebound."Read More
Macy’s is building an off-price business with Backstage, currently with 45 locations (including 38 inside of existing Macy’s stores and seven free-standing stores). Macy’s does not currently have a competitive edge in off-price retailing; and the key to making this initiative a profitable is execution—their ability to find, buy, display, price and manage this new business. We believe Macy’s is smart to experiment with an off-price concept as it will make them a better overall competitor.Read More
Chipotle's CEO signals new perspective, no longer “business as usual” and that the board is serious about making improvements. Other boxes already checked include strong cash flow and no debt; but there are also as-yet unchecked boxes: outsider CEO with a credible strategy, attractive valuation. Without attractive valuation, Chipotle may never justify an investment.Read More
The Turnaround Letter's Catalysts Report reflects our contrarian investing approach--calling attention to those companies that caught our attention as a result of some sort of recent event that could accelerate positive change.Read More
When you hear the media get excited about a 100-point move in the Dow, remember what this really means--that the media is trying to get your attention, not necessarily that anything important is going on in the market.Read More
Tesla is pressed by an age-old nemesis, which makes its financials and operations fragile. Why is Ford even in this discussion? Because Tesla’s nemesis is working to Ford’s advantage...Read More
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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