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.
The outlook for agriculture commodity producer Mosaic Company (NYSE: MOS) is driven largely by commodity prices, and to a lesser extent by profit improvements at the Vale Fertilizante operation it recently acquired. Improving pricing in both phosphates and potash along with its likely strong synergies with Vale Fertilizante are providing a much better outlook for the company in 2018.
Specialty snack maker Amplify Snack Brands (BETR) agreed to be acquired by Hershey’s for $12/share, a 71% premium over its prior closing price. We highlighted Amplify as a strong turnaround candidate in October at its then-current price of $7.23.
Chipotle's CEO signals new perspective, no longer “business as usual” and that the board is serious about making improvements. Other boxes already checked include strong cash flow and no debt; but there are also as-yet unchecked boxes: outsider CEO with a credible strategy, attractive valuation. Without attractive valuation, Chipotle may never justify an investment.
These value stock opportunities have impressive financial traits: strong balance sheets, prodigious cash flows and generous payouts to shareholders. Strategically, they have powerful brands, strong negotiating leverage with grocers, impressive distribution networks and increasingly talented and fresh leadership teams.
Post Holdings shares have vastly outperformed Kellogg's and the S&P500 over the past three years. Similarly, Post's crisp revenue and earnings growth has left Kellogg's looking soggy. However, the two companies' prospects may diverge again, but in a different direction. In this note, we analyze Post Holdings' recipe for its strong returns, assess what has held Kellogg's back and explore Kellogg's outlook compared to Post Holdings' to answer the question: Should Kellogg's shareholders have Post Holdings envy?
Diners may seem like a fickle group: One day everyone flocks to Restaurant X as the place to eat, only to quickly replace it with the next fad, Restaurant Z. The reality is different, though. Most people like to go to their regular restaurant again and again, and it’s only when the restaurants basically tell their customers “please don’t come here anymore” by offering unappealing food, poor service, higher prices and tired surroundings that the customers look elsewhere. This article identifies several restaurant turnaround stocks with well-known franchises, reasonable balance sheets and attractive valuations. Several also have new management teams. With some patience, these stocks might serve up some tasty returns for investors.
Agricultural commodities have been in a slump for much of the last three years as a result of shorter-term issues such as over-production of certain crops, weather issues and temporary swings in demand related to local economic conditions and currency movements. We believe that the agricultural cycle is likely to begin to rebound in the not-too-distant future.
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."