Excerpted from the July 2016 Issue
So, where do we go from here? With the S&P 500 Index having already exceeded the 3% return we anticipated in our January issue, we have modest expectations for the rest of the year. Valuations for large-cap stocks remain high, and earnings growth looks tepid. Stocks with “low volatility” and stable earnings appear particularly expensive to us. Smaller-cap stocks, value stocks and those with unique situations continue to look much more appealing. In general, we expect the U.S. economy to...Read More
It is essential for a turnaround company to maintain a steady level of sales to provide the cash flow and time span needed to carry out its recovery plan: If revenues remain stable, there is a high probability that the turnaround will eventually succeed. Read More
The best environment for turnaround stocks is when the economy is just beginning to improve after a slowdown. As broad economic conditions improve, the weakness of turnaround companies can become their strength as they benefit much more than healthier companies. Their sharper recovery can lead to outsized share price gains relative to other stocks.Read More
Selecting a turnaround stock with solid profit potential can almost be considered an art form in itself. As noted in our other distressed investing blog entries there are many factors to evaluate to determine the real possibilities in any turnaround situation, and here is one more: Look for solid core businesses.Read More
Turnaround investing can be very profitable, but how do contrarians go about selecting the most potentially lucrative opportunities? One proven technique is to watch for management changes. Just as real estate experts say there are three keys to success in real estate, we believe there are three keys to success in turnarounds: management, management, management. Read More
Excerpted from the June 2016 Issue
For what seems like the umpteenth time over the last several years, investors – in both stocks and bonds – are once again focused on the questions of “Will the Fed raise interest rates? When? And by how much?” The stock and bond markets often react quite sharply to whatever the “expert” view is on any given day.Read More
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. Read More
Sometimes a company will struggle because of an isolated problem that is not related to its core business prospects. Litigation is a common example. When an otherwise healthy company becomes encumbered with a potentially major liability, management gets distracted and investors flee. A mighty battleship can’t escape its anchor. However, if the company can resolve this problem its stock and bonds may advance sharply and present a potentially lucrative turnaround investing opportunity.
Year after year, many of the biggest winners on Wall Street are struggling companies that turn themselves around and return to favor with investors, but not every laggard is going to turn into a success story. You can improve your chances of spotting a successful opportunity by following some basic rules that apply to almost all turnarounds.Read More
Excerpted from the April 2016 Issue
Our answer is “No, at least not for many decades,” but many investors appear to disagree. When some retailers posted disappointing results last autumn, many retail stocks dropped 40-50% from highs set only a few months earlier. 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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