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

Dow Hits 20,000, But These Dogs Are Still Sitting On The Porch

Excerpted from the February 2017 Issue

It finally happened: After taunting investors with several near-misses, the Dow Jones Industrial Average closed above 20,000 for the first time late this past month. It has been a good run – since the end of 2013, the Dow has gained 21%, about the same as the much broader S&P 500 Index. So with the Average closing at a record high, all of the 30 member stocks must have produced good returns, right?  Not exactly.  Many stocks in the Dow have performed exceptionally well: Home Depot shares rose 68%, Microsoft shares gained 76% and UnitedHealth Group surged over 116%. Yet there are several stocks that have been complete “dogs.” 

There is a well-known investing theory called “The Dogs of the Dow,” which focuses on the component stocks in the Dow that have the highest dividend yields. We created a different version of the Dogs of the Dow: we selected the seven stocks that have completely missed the rally over the past three years. If these lazy dogs get off the porch, they could have a market-beating run. All seven are solid, well-run companies with healthy balance sheets. Many offer attractive dividend yields. Some offer defensive traits should the stock market or oil prices turn downward.  Others have unique company-specific aspects that could bring them back to life.

Get all the details on these timely value stock opoortunities.

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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."