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.

Heavy Construction Stocks: Digging Out of a Hole?

Excerpted from July 2013 Issue

While the rest of the market has been on a tear for the first part of the year, one sector that has particularly underperformed has been heavy construction companies. As contrarian investors that translates to stock profit opportunity, and we've identified several appealing purchase options.

The heavy construction sector, as a whole, is slightly underwater for the year to date, and the stocks below are down an average of ten percent. Part of this underperformance may be related to the weakness in the metals stocks that we discussed in February and in the mining stocks discussed in May. Among other things, all of these sectors appear to be weighed down by concerns about a near-term slowdown in China.

Longer-term, the fundamentals for this sector look pretty favorable. In the U.S., the real estate markets appear to be recovering, and in the public sector there is growing awareness of our need to rebuild our infrastructure. Globally, all of the emerging markets are likely to need extensive heavy construction in the years to come.

The stocks profiled in our July 2013 article are in different aspects heavy of heavy construction or machinery.. They have all been under pressure recently, but have good long-term prospects. Click here to learn about nine stock profit opportunities within the heavy construction sector.

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IBM: Not Yet Time to Swing at this Pitch

IBM’s stock underperformance since IBM’s current CEO took the helm in 2012 has been stark, with the shares declining 23% while the S&P500 Index has more than doubled. One big problem: revenue growth rate is zero, at best. Without revenue growth, what’s left to entice investors? The real driver of value at IBM – free cash flow that is used to repurchase shares. Can IBM borrow its way to shareholder prosperity as its cash flows shrink? What to do with IBM shares? Wait for a better pitch in the form of a catalyst or much lower valuation. 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."