​Why Some Turnarounds May Flourish or Fail

MoneyShow  |

Image via Nicholas Eckhart/Flickr CC

Recently, I was interviewed by Chuck Jaffe, a senior columnist for MarketWatch and host of “MoneyLife with Chuck Jaffe.” I thought I might pass along some of the highlights, says turnaround specialist George Putnam, editor of The Turnaround Letter.

What separates turnarounds that are buying opportunities from those that will languish? A solid core business upon which to build the turnaround, new leadership and “a balance sheet that is not so awful that it will drag the company down.” We also may look for a secular trend that indicates the entire sector will turn upward.

With sectors like retailing that have secular headwinds from competitors like Amazon (AMZN), The Turnaround Letter searches for beaten down companies that look promising. Macy’s (M) has a great brand, is reinvesting in its business and has valuable real estate holdings.

We believe Macy’s will survive and eventually flourish. At the other end of the spectrum is Sears (SHLD), which has not re-invested in its operations and is dying quickly.

The battered energy sector provides some opportunities as companies have learned to live with $45-50 oil. We like Weatherford (WFT), an oil services company with new leadership that is reducing its debt and lowering its costs.

Credit Suisse (CS) is a financial stock we like. It is a large, well-known and global investment company that was poorly-managed, found itself over-extended in investment banking and facing fines.

The new CEO brings strong turnaround experience, the company has a good franchise and the stock pays an attractive dividend.

George Putnam has edited The Turnaround Letter since its founding in 1986.

Subscribe to George Putnam's The Turnaround Letter here…

About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


Discover: Trending Events

United Nations
EU Parliament
Humanity 2.0
World Economic Forum

Companies

Symbol Name Price Change % Volume
CS Credit Suisse Group American Depositary Shares 13.65 0.03 0.22 2,943,040 Trade
M Macy's Inc 16.07 -0.60 -3.60 12,522,382 Trade
SHLD SHLDQ Sears Holdings Corporation n/a n/a n/a 0
WFT WFTIF Weatherford International plc (Ireland) n/a n/a n/a 0
AMZN Amazon.com Inc. 2,155.67 20.80 0.97 2,951,070 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
GOOG

     
XOM

     
BRK.A

     
FB

     
JNJ

     
WFC

     
T

     
NFLX

     
TSLA

     
V

     
UNH

     
PG

     

World Economic Forum at Davos 2019 - Ben Yablon Executive VP Salt Lending

Matt Bird sits down with Ben Yablon - Executive VP of Salt Lending - at the World Economic Forum in Davos January 2019