The Turnaround Letter

November 2018

Volume: 33
Edition: 5

Stock Pick & Stock Sales

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Purchase Recommendation - November 2018

This month's purchase recommendation is a mid-cap building supplier that has been plagued by several internal issues as well as worries about a possible ending of the housing cycle and the economic expansion. While the narrative isn’t very appealing, we believe the reality is much brighter.
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Turnaround Investing Articles

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Homebuilder Stocks: Time to Move In?

After a long period of enthusiasm for homebuilders’ stocks during the post-financial crisis recovery, the market has closed the door on this group. A major worry is that the housing cycle may be ending, partly due to recession fears and partly due to rising mortgage interest rates (approaching 5%), increasing home prices and new limits on the deductibility of property taxes that all make affordability a challenge to many potential buyers. Adding to the revenue pressures are higher labor, materials and land costs that combine to threaten homebuilders’ profits. However, unlike the excesses that built up during the 2006-2008 housing crisis, there is little evidence of an impending collapse.
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Post-Chapter 11 E&P Companies: An Opportunity In The Oil Patch

A group that is doubly out-of-favor is the energy exploration and production (E&P) companies that have emerged from Chapter 11 bankruptcy. E&P stocks in general have fallen sharply over concerns that oil and gas prices may once again tumble. Yet in their rush to abandon these stocks, investors are creating some bargains.
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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

Amazon = US GDP 1970

Amazon joined Apple in reaching a $1 trillion market capitalization. $1 trillion is about the same as the total value of New York City property and the total value of loans at JP Morgan, the nation’s largest bank in terms of assets. Jeff Bezos’ $160 billion stake would place him (personally) as the #33 largest company in the S&P 500 in terms of market cap, next to Coca-Cola, Disney and Netflix. We aren’t bold enough to predict whether the shares will continue upwards or if they are in a bubble reaching maximum inflation. Setting aside for a moment their investment prospects, let’s admire the truly remarkable milestone that these two companies have reached. Read More.

EV/EBITDA: What Is It & Why Are We Using It More?

In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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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."