8 Ways to Spot a Company on the Rebound
Great turnaround stories are NOT everywhere.
Sure. You hear about potential turnarounds, but how many really pan out? And do you have the patience to wait and see what happens?
A turnaround is when a company experiences a long rough patch, sets in motion a plan to turn itself around and then delivers on its promise. The rewards can be nothing short of spectacular.
Here are eight signs to look for to spot a GREAT turnaround:
- Radical transparency
Management has to be honest about the issues at hand. Many managers hide their heads in the sand and “hope” the situation will improve on its own. It rarely does. Most times, it gets even worse.
- People want the product
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. There’s no point in trying to resurrect VHS rental shops or floppy disks!
- New sheriff in town
If the existing management team has no vision or has failed to execute its vision, the company must make a change in leadership.
- Cash is available
Access to capital is critical. A turnaround takes time and money – especially if the company’s entire business model is turned upside down and it requires a fresh start.
- A clear strategy
Foresight. Hindsight is great, but foresight is better. If management cannot articulate a strategy, then there isn’t one. End of story. End of turnaround.
- A proven track record
The company has to have a history of big performance. The shareholders need to know that the new iteration of the company can regain its former glory. After all, what’s the point of being in a stock if there’s no potential for a huge payout?
- The price is right
The share price must be at a level where the new shareholders will stand to make HUGE money if the turnaround succeeds.
- Management is invested
Insiders must have a stake. If they are putting money in, then they have skin in the game too.
YOUR ACTION PLAN
Finding a turnaround story that meets some of these criteria is hard enough. But finding one that meets all of them is like finding a unicorn.
Well, we’re excited to say we’ve found one. Our Trade of the Day Plus members are already getting the story, and you can find out more by joining today. The stock currently trades for under $2, and it is one of the most recognizable brands in the world. It recently announced its turnaround was in motion… and the stock popped 20% on the news! But in my opinion, it’s just getting started.