One of the things we like to see in a potential turnaround stock is a strong brand name. That will often provide the foundation on which the company can build its turnaround. However, the recent Chapter 11 filing by Hostess Brands and Eastman Kodak are reminders that well known brand names alone may not be enough to save a company. In both of these cases the brand names are widely recognized, but the products with which they are associated no longer represent strong business franchises.
The question continues..."Investment is always a risk, but there must occasionally be situations when you would "bet the farm" on a stock at a given time. Trouble is, I don't have a farm, but would someday like to get one."Read More
Since last August, the stock market has been dominated by headlines about financial matters in Europe. It has been almost as though the fundamentals of U.S. stocks don’t matter anymore. Things might look great (well, maybe they haven’t ever looked great in recent months, but at least okay) in the U.S. but if Europe didn’t seem to be making any progress on solving its latest crisis (Greece, Ireland, Portugal or wherever) the Dow would fall sharply. Then if good news came from across the Atlantic, the Dow would soar.
I don’t usually respond to stock specific questions in this section of the website, but Bank of America is such a bellwether for the banking sector, and probably for turnaround stocks in general, that it is worth talking about here.Read More
After a long dry spell with few significant bankruptcies, we’ve seen four large public companies file for Chapter 11 protection in the last three weeks: MF Global Holdings (total assets of $40.5 billion) on October 31, Syms (assets of $271 million) on November 2, Dynegy Holdings (assets of $9.9 billion) on November 7 and General Maritime (assets of $1.8 billion) on November 17. Taken together, these four filings represent more assets going into Chapter 11 than all of the other bankruptcies over the preceding 19+ months combined.
There’s a lot to worry about right now out there in the financial world. The European debt problems, the volatility in the stock market and the gridlock in Washington are probably at the top of many worry lists.
You should almost never buy the stock of a company in Chapter 11. The only possible exception is if you are a very daring short-term trader. Even if a company successfully emerges from Chapter 11, rarely is there enough value in the reorganized company to make the old stock worth anything.Read More
While there is no hard and fast definition of a “penny stock,” the term refers to a stock selling at a very low dollar price. Some people would say that a stock must be trading below $1.00 per share to be a true penny stock; others might include stocks trading below $5.00 per share. The term penny stock often has a negative connotation because...Read More
This question is a little too philosophical for us to tackle. But it was prompted by a weird coincidence that we do want to examine.
There is an old investors’ maxim that goes something like “The stock market has forecast ten of the last five recessions.” We don’t know if the U.S. economy is going into (or already in) another recession....
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Harnessing Activists to Help Find Turnaround Stocks
Activist investors often produce attractive returns for their clients; and you can still use their influence to help your position as a turnaround investor in two ways: Buy a position in a stock with the expectation that an activist will soon follow or buy after an activist takes a stake.
While one of the many dozens of activist funds might find their way to selecting your particular stock, this approach is likely to be frustrating and unrewarding. A better approach is to buy after the activist makes their move. Once an activist takes a stake in a company, how do you evaluate whether it is worthwhile to follow on? Admittedly, this is a bit of an art... Learn how you can harness the power of activist investors to find market-beating turnaround stocks.
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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