This well-capitalized company has new management that is leading a turnaround.
February 1, 2019
After being out-of-favor for years, this company has new leadership with strong operating experience. Backed by a strong balance sheet, our Buy recommendation should meaningfully improve its earning power and valuation.
As the stock market was selling off late last year, many of our Recommended stocks tumbled sharply. Turnaround investors are well-served by ignoring this sentiment and focusing instead on each company’s particular turnaround.
In nearly every case, the shares of a company in bankruptcy become worthless. In very rare cases, however, they can become great investments. W.R. Grace (NYSE:GRA) shares produced a 75-fold return, as an example. With California utility PG&E (NYSE:PCG) now in bankruptcy, the range of possible outcomes for its equity is wide.
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.
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."