Investing Secrets: How to Identify Promising Turnaround Companies and Boost Your Returns
How do you spot a good turnaround story?
Great turnaround stories are NOT everywhere. Sure, you hear about potential turnarounds, but how may really pan out? And do you have the patience?
What is a turnaround story?
A turnaround is when a company experiences a long rough patch, sets in motion a plan to turn the company around and then delivers on its promise. The rewards can be nothing short of spectacular. Some success stories include Apple, FedEx, Marvel, and even Starbucks.
Here are the steps, elements and advantages to a successful turnaround:
- Management has to be honest about the issues at hand. Many managers hide their heads in the sand and “hope” the situation will correct on its own. It rarely does. Most times it gets even worse.
- The company must have products people want to buy and it must have a pipeline of NEW products that will excite people for the future. No point trying to resurrect VHS rental shops or floppy disks!
- The management team must be changed if the previous one has no vision or has failed to execute.
- Access to capital is critical. Turnarounds take time and money. In some cases, the entire business model is turned upside down and a fresh start is required.
- Hindsight is great, but foresight is better. If management cannot articulate a strategy then there isn’t one. End of story. End of turnaround.
- Historical performance. The company has to have a history of big performance. The shareholders need to know that the company in its new iteration can regain glory. After-all, what is the point in being in a story if it’s got no potential huge payout?
- The share price must be at a level where the new shareholders will stand to make HUGE money if the turnaround succeeds.
- Insiders must have a stake. If they are putting money in, then they have skin in the game too.
Finding a turnaround that meets some of these criteria is hard. Finding one that meets all of them is like finding a unicorn. Well, we have found one and members are already getting the story. You can find out more about this single under $2 company that is one of the most recognizable brands in the world and it just announced that its turnaround was in motion…the stock popped over 20% on the news, but in my opinion, it’s just getting started! The previous high was in the teens!! Click here to learn more about this turnaround company.