|
Author: Hari Wibowo Article source: http://www.theezine.net/. Used with author's permission.
There are many types of investment methodology out there. All of them has their own merits. I for one, personally like to invest in turnaround stocks. What is turnaround stocks? They are normally companies that are experiencing problems (hopefully short-term), and a lot of people are not willing to wait for those companies to recover.
I personally like turnaround stocks for two main reasons; First, turnaround stocks have problems in the open. The problem has been disclosed and our task as investor is to figure out how much the company is worth should the problem persists or when the problem goes away. Granted, there might be more problems discovered along the way. But at the very least, some of the problems has come out and the share price generally has dropped because of that.
Secondly, expectation is low for turnaround investment. Share price is already depressed due to known problems. The company does not have to 'beat expectation' every time it reports earning. All it has to do is clear out the problems that causes its stock price to drop on the first place.
How should one find a potential turnaround candidates for their portfolio? The one thing that I found useful is to read the financial news. Companies that are in trouble can be easily spotted in the news. For example, this week brought news from Pier 1 Imports Inc. (PIR) and Doral Financial (DRL). Are these companies in trouble? Sure. Are they turnaround candidates? Possibly.
Another good source would be the list of stocks that are touching 52 week low. Most of these lists would be companies that are experiencing problems and hence has the potential of turning around. For example ATI Technologies Inc. (ATYT) trade closes to its 52 week low of $ 11.20.
What to avoid when sifting through lists of potential turnaround investment? I would avoid company that is getting hammered due to the delay in its financial reporting. No matter how low the share price is, investors do not and should not invest in companies that has some trust issues.
Once we identify our target, we can then do some analysis to determine the fair value of the stock. There are chances that some companies may never recover. So, we have to take that into accounts when doing fair value calculation. Calculating fair value is a whole brand new topic and I won't get into the details here. But obviously, a stock will have a higher fair value if it can recover from current problems than a stock that cannot overcome its current problems. Hari Wibowo manages a small finance website aiming to help new investors getting started. Curious? You can find his other writings at http://www.noviceinvesting.com
Poker Bluffing - Ten Winning Tips
Bluffing is the art of making other players believe you have a better hand than you really have. If used correctly bluffing can help you enhance your profits fr...
Public Sector Economies in Transition
In the previous article, we described the various methods developed in the West to cope with the ever-burgeoning public sector. Yet, economies in transition e...
Becoming a Success Giant!
Success - we all read about it, hear it on the news, and label some individuals as "successful." In this society, a person is believed to be successful, just by...
How to Get a Secured Loan UK
Living in the United Kingdom, you might find yourself in the market for a secured loan UK.
I Would Give Anything To …
A couple days ago I was listening to a CD by one of the most successful speakers in the industry. He has been around for many years and is considered one of the...
Making Meetings Work
We have all attended meetings that were boring, mindless and profoundly ineffective. Meetings don't have to be a waste of time. Rather, they can be productive ...
How Toxic Is Your Home?
Toxic chemicals are everywhere in the average American home. Learn
10 simple, inexpensive things you can do to start on the road to a
toxic-free home!
Take the Contract with You
I learned something very interesting this week. Thankfully, what I learned was really at no one's expense. What I learned is that when you are on a sales call a...
Real Estate Investment - When, What and Where?
Beside the life cycle of real estate market, individual property has its own life cycle. Properties can be purchased at pre construction, as new home inventory ...
The Graphic Problem
Most typical file formats such as bmp, jpeg, png, etc. will give the physical image size. This is done through DPI. For raster images (those images in rectang...
The Radionics Natural Healing System - The Radionics-Pratictioner
Some of natural vibratory remedies, that we usually buy or that our patients buy for prices which are often little affordable to the big mass, often discourage ...
Got Cravings? Consider the Yin and Yang of Your Food
Are you constantly craving sweets and want to understand why? Or perhaps salt is more your style? Either way, you can minimize your cravings so that you choose ...
Backend Profit Secrets and Viral Marketing
Learn how to sacrifice front end profits to gain more affiliates, more subscribers and more customers automatically. This is one of the most powerful and underu...
Alternative Therapies for Acid Reflux Disease
Find out more about acid reflux treatments.
Online Shoppers, Beware of a New Scam
On April 6 Panda Software warned Internet users of a new brazen scam aimed at stealing private data. Several websites offering cheap airline tickets in fact wer...
If You Rent A Home, Protect It By Buying Renters Insurance
Renters insurance is often overlooked by people who are renting their house or apartment. Many people don't realize that their landlord's insurance only covers...
Buying Shoes Online - The Benefits
Discover the benefits of buying shoes online. Your feet will
thank you.
Improving Your Body Immune System
The immune system in your body is an amazing functionality that produces antibodies to fight against any infections whether it is bacterial, fungal, or cancers.
Upper Arm Lift – Cosmetic Surgery Procedure
As the human body ages our skin becomes looser and less elastic, causing it to droop and sag.
Are These Simple Trading Mistakes Costing You Money In The Forex Market
The 2% rule is a powerful tool in Forex trading. By adopting this rule you're using a strategy that decreases the size of your losses during losing streaks, an ...
The Secret To Marketing Your FSBO Home For Sale
You're ready to put your home or land (house, townhouse, condo, apartment, farm, ranch, finished lot, raw land, etc.) on the market as a FSBO (for sale by owner...
Your Vibrational Meter
You have within you a god-given vibrational meter that tells you what is good for you and what is not good for you. That vibrational meter is your emotions. If ...
Making Teams Work for MLM Business
When MLM teams do work, the productivity increases significantly costs reduce. This is a clear path to success for those who desire to gain benefits from using ...
Behavioral Interview Questions You Can Use Monday Morning
Past performance is the best indicator of future performance. That's the concept behind behavioral interviewing and this article shows you how.
|
Print this page