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.
This services company has an unusual niche in the energy and mining industries.
December 31, 2018
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.
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.
Oilfield lodging provider Civeo Corporation’s (CVEO) acquisition of privately held Canadian energy field accommodations firm Noralta Lodge in a cash and stock deal strengthens its financial and strategic position.
Oilfield lodging provider Civeo Corporation (CVEO) reported reasonable results for the 3rd quarter. Industry conditions are slowly improving but shares fell as investors were overly enthusiastic in their hopes for a quicker rebound, similar to the second quarter.
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."