Small Cap

Under $1 Billion

ARTICLES

Purchase Recommendation - February 2019

This well-capitalized company has new management that is leading a turnaround.

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. 


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Purchase Recommendation - January 2019

This services company has an unusual niche in the energy and mining industries.

Weak oil prices, some relatively minor operating issues and highly risk-averse year-end investor sentiment has pushed its shares to near-record lows. Yet the company’s business is more durable than it might appear, the management continues to improve its operations, and it is generating positive operating free cash flow. While its shares carry significant risk, we believe the considerable return potential more than offsets the risks.


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This small-cap meal kit delivery company is this month's stock pick.

Purchase Recommendation - July 2018

This month's purchase recommendation is a food company in a rapidly-growing segment, yet with its survival threatened by operational and strategic difficulties. An entirely new leadership team with impressive experience in critical areas is moving aggressively to bolster the business while pursuing new growth opportunities. While its challenges and risks are real, investors seem to be more focused on its past than on what the company is doing now to improve.
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This small-cap home-building company is this month's stock pick.

Purchase Recommendation - May 2018

A recent debt refinancing should provide considerable financial flexibility, but it involves an intentional, technical default that has rattled shareholders and threatens a potentially costly legal entanglement. As a still quite leveraged company tied to the strength of the housing market, this company's shares carry significant risks, but we think those risks are outweighed by the upside potential in the stock.


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Gannett: 4Q17 Results OK but Progress is a Bit Slow. Compelling Value.

Gannett's turnaround is driven by revenue stability, higher EBITDA and steady cash flow production. Progress on achieving revenue stability is a bit slow, but cash flow generation remains healthy. EBITDA progress is a bit slow, as well--2018 guidance suggests more time is needed. Management continues to evolve the business as they learn. Even though challenges remain, there are opportunities for more acquisitions. Gannett's current valuation is a compelling 3.9x EBITDA, and offers an attractive, well-covered 6.3% yield.
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NII Holdings 4Q17 Earnings: More Cash Burn

NII Holdings’ sole business Nextel Brazil continues to struggle to slow the rapid decline of its older iDEN wireless business while it works to improve its 3G/4G operations. Aggressive cost-cutting is helping but its cash balances continue to decline. The proposed easing of regulatory hurdles would increase its chances of being acquired at a sizeable premium.


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Stock moved to sell recommendation following acquisition.

Sale Recommendation - March 2018

This engineering and water services firm agreed to be acquired in an all-stock deal, and we recommended the sale of its shares.
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Layne to be Acquired by Granite Construction | Moving Rating to a SELL

Engineering and water services firm Layne Christensen (Nasdaq: LAYN) agreed to be acquired by Granite Construction in an all-stock deal worth $15.36/share at the intraday trading price for Granite shares. This price is a 20% premium to yesterday's closing price for LAYN shareholders. We are moving LAYN shares to a SELL.
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Identify & Profit from Distressed Investing

Free Report: Turnaround Investing Mistakes

Turnaround Investing Blog

Turnaround Investing Blog

Is there value in bankrupt PG&E’s stock?

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.

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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."