This month's purchase recommendation is one of the country’s largest meal kit delivery companies. Investors eagerly anticipated its initial public offering, but were soon turned off. The company’s challenges are real. But investors seem to be more focused on the past than on what the company is doing now to improve.
For many large pharmaceutical companies, the past few years have been a struggle. Despite increases in overall healthcare spending and a wave of innovative treatments, more drugs are facing revenue-draining generic competition, regulators are tightening their scrutiny on pricing, and the pool of ailments yet to be conquered is shrinking. Some firms have navigated the changes reasonably well. Below we highlight six turnaround candidates in the pharmaceutical sector.
Bankruptcy activity has slowed somewhat in the first half of 2018. As long as the debt markets remain robust (some might say “frothy”), the number of large public bankruptcies may stay low. However, we expect to see bankruptcy activity pick up significantly in the not-too-distant future.
As we write this just before the middle of the year, the S&P500 has gained 2.5%, a relatively modest result compared to its impressive returns since 2009. It is hard to pinpoint any major drivers for the market performance.
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.
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.
This Forbeswrite-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."