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.

Stock Market Forecast: As January Goes...

Excerpted from February 2014 Issue

…so goes the year. This saying is one of many gimmicks that investors use early in the new year to try to predict how the stock market will perform in the year to come. With the stock market turning down in January, many investors are looking to various crystal balls for guidance on where the market is going for the rest of the year. Among the other “indicators” that people look at are things like the following:

  • First five days of January--if the market is up in the first five days of January, it will be up for the full year, and vice versa.
  • Super Bowl winner--if an NFC team (or a former NFC team) wins the Super Bowl, the market will be up; if an AFC team wins, the market will be down.
  • Hollywood indicator--if Hollywood comes out with a blockbuster film about Wall Street (such as The Wolf of Wall Street) around the beginning of the year, that is supposed to be negative for the market.
  • Butter Production in Bangladesh--supposedly if you multiply the annual change in butter production in Bangladesh in the preceding year by two, it will give you the exact percentage by which the S&P 500 will move in the year to come.

Of course, there are several basic problems with all of these. First of all, they have little or no economic basis. You could perhaps argue that the market’s movements in January may give some indication of investor sentiment that could carry on through the year, but a lot can happen in the next 11 months to change that sentiment. And most of the other indicators rely much more on coincidence than even a whiff of economic reality. The second problem with these stock market indicators...

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Tupperware: Not a Good Fit as a Turnaround Stock

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. 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."