Turnaround Investing Blog

George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

Stocks That Pay Dividends / Technology Hardware, Equipment, & Services

Technology Turnarounds: Opportunity in Stocks that Pay Dividends & Former Internet High-Flyers

Excerpted from November 2012 Issue

Technology stocks have been weak in recent weeks. Even the darling of the tech world, Apple, has fallen more than 20% from its September high. Is this a good time to buy and lock in tech stock profit?

Maybe. Technology stocks are notoriously volatile. One minute investors love them; the next minute they hate them. If you are interested in this space, we recommend avoiding the high-flyers. Rather, we suggest two more contrarian investing approaches.

Our preferred approach is to focus on well-established tech companies’ stocks that pay solid dividends. They may be less sexy than the latest darlings, but their stockholders get paid even if the sector remains in the doldrums for some time.

Yes, we know Apple pays a dividend. But we are not willing to recommend it around $600 a share because we think the stock will be in for a bumpy ride if the company can’t keep coming up with blockbuster products. (For the record, we did like it once. We recommended Apple stock in November 2002 at 7.80 per share, split adjusted. Of course we sold it too soon, but the purchase recommendation was still a good call.)

In the November issue we offer eight technology stock picks with solid market positions and stock yields of more than three percent.

While technology turnaround stocks that pay dividends may be safer than some other technology investments, they probably do not have as much juice in them as some of the former Internet high-flyers that have come rudely back to earth. If these companies can turn around either their results or investor perceptions--or better still, both--the stocks could move up dramatically.

The same investment newsletter names eight stock profit opportunities in fallen Internet companies—each of which have large markets and the potential to generate significant profits if they can figure out how to make money in those markets. Moreover, most of them have little or no debt, and so they are somewhat like long-term options.

Of course, anyone with a stock trading education will remind you: there is no such thing as an entirely safe investment. Like options, these fallen Internet stocks have significant upside, but some of them also have the potential to be worthless, or nearly so, if they can’t come up with a profitable business model before they run out of money.

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Lessons from the 1st Turnaround Letter of 32 Years ago

In July, 1986, exactly 32 years ago, George Putnam sent the first Turnaround Letter to subscribers. Technology back then seems like the Stone Age, with hard copy research and primitive CompuServe dial-up service. Wall Street ignored turnaround stocks back then and continues to ignore them today. While technology has changed immensely in 32 years, The Turnaround Letter’s philosophy of selecting out-of-favor companies on the verge of turning around hasn’t changed. Our timeless process helped driven The Turnaround Letter’s independently-verified market-beating returns. Read More.

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.

Read More.

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."