The Turnaround Letter

January 2018

Volume: 32
Edition: 7

Stock Pick & Stock Sales

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Timely stock market advice.

Sale Recommendation - January 2018

We see diminishing likelihood of a higher competing bid and recommend selling this mid-cap and locking in 45% stock profit.
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At a generous 5.6% dividend, these shares could provide strong returns to value investors. 

Purchase Recommendation - January 2018

This mid-cap stock pick’s outlook is much healthier than the stock market is giving it credit for: Despite the lackluster summer, revenues will likely be flat from a year ago; and the company’s upgrade program is showing very promising results. Management is focusing its cash flow on repaying down much of its elevated debt by 2019 as well as on high-return upgrade projects and repurchasing $100 million of its shares. With no significant debt maturities until 2022, the company has considerable runway. 
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Turnaround Investing Articles

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We always recommend holding a well-diversified group of turnaround stocks.

Picking Favorites for 2018

Each year, we select our “Top Five” stocks--those that look poised for the sharpest gains in the year ahead. Three of these value investing opportunities also offer dividends.
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The large number of companies emerging from Chapter 11 has created post-reorganization stock opportunities. 

2017 Bankruptcy Review

Looking ahead, we expect corporate bankruptcy activity to remain at a high level for at least the next few years. Much of the unprecedented amount of debt that has been raised during the exuberant markets since 2009 comes due soon. If we are correct and the pace of defaults pick up, this will create a wealth of opportunities for distressed debt investors. 
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Stock markets across the globe were strong in 2017.

2018 Outlook: More Gains Likely But With A Bumpier Ride

With all the humility that any outlook requires, we can make an easy case for more stock market gains in 2018, as nearly every indicator points in this direction: Low interest rates, strengthening economies and more stimulus from the United States’ landmark tax law should foster more earnings growth and provide an overall supportive environment. But as contrarians, we see this view as being widely held and at risk of becoming the “only” view. 
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Turnaround News & Updates

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Identify & Profit from Distressed Investing

Free Report: Turnaround Investing Mistakes

Turnaround Investing Blog

Turnaround Investing Blog

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.

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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."