The Turnaround Letter Blog

Learn how to find and invest in undervalued stocks from the market insider that MSN Money’s Michael Brush calls one of his “favorite value managers for the past decade.”, George Putnam III.

Latest Stories

Featured Stories

Filter By Categories
Bruce W. Kaser, CFA
By
February 13, 2020

Rebound stock ideas related to the Coronavirus

The Turnaround Letter focuses on longer-term turnarounds, usually with 2-3 year horizons, but we occasionally will look at stocks selling at unusual discounts for temporary reasons. The recent sell-off related to the Coronavirus may or may not be one of these opportunities.

 

The rapid spread of the illness has shut down much of China, which some fear may develop into a global economic slowdown.  Media reports with dire prognoses abound.

 

Says Just-Auto.com:

"Automakers this week announced further extensions to their plant closures in China as the coronavirus outbreak continued to spread and claim more lives. related to Components, Emerging markets, Vehicle manufacturers, Ford Group, General Motors, Honda Group, Hyundai-Kia Group, PSA Groupe, Renault S.A., Toyota Group, Volkswagen Group, Dongfeng,"

 

Adds ICIS

"The coronavirus outbreak in China will hit global chemicals demand as local governments extend Lunar New Year holidays and manufacturing plants and retail outlets shut down.

Production and trade in China’s petrochemical industry will be disrupted following extensions of the Lunar New Year holiday period as the country struggles to contain the deadly epidemic."

 

We don't under estimate the risk.. But we do think it is possible this has pressured stocks of economically sensitive companies, including oil and copper producers and some global industrial companies. Similarly, it has pressured stocks of travel-related companies including airlines, cruise ships and casinos.

 

Concerns over these risks has led investors to quickly sell exposed stocks, with many down 15%-25% or more in a very short period of time. Yet, as the virus relents to increasingly aggressive world health interventions, these risks may be overly discounted.

 

Listed below is a basket of 13 stocks that appear to have been oversold and may provide short-term rebound opportunities. The stock price changes reflect declines since the close of January 16th, the last day prior to the start of the Coronavirus sell-down. All of the stocks have readily liquid shares that trade on either the NYSE or Nasdaq.

 

One of my colleagues in a former job told me once people always over emphasize the immediate impact of events, and underestimate the long term effect of the same events. 

 

This note is also published online at turnaroundletter.com. It is also indicative of the sort of spot updates we send to our subscribers, over and above our monthly newsletter.

 

The way we think is not for everybody.  And none of these stocks are in our Turnaround Letter Portfolio.  But if you like the way we think, perhaps you should consider a Turnaround Letter subscription.

 

Now would be a good time to do so.  Since 1986, there has been only one price increase in the cost of a subscription.  We are about to implement the second.

Don't Miss a Post, Subscribe to our Free Blog Here

Beard-group-ad
distressed investing CTA
10 common mistakes download

The Turnaround Letter is an independent investment research service focused on identifying out-of-favor stocks with real value undergoing significant positive changes. Turnaround situations are often neglected by Wall Street research and by most investors, as these stocks involve higher risk and greater uncertainty, yet they also have the potential for higher returns.

 

Published for over 30 years by veteran turnaround investor George Putnam III, The Turnaround Letter provides subscribers with insight, advice and specific recommendations backed by rigorous, institutional quality research. Stocks on our Recommended List have produced an annualized rate of return of 9.4% over the past 20 years, compared to the 6.4% annualized rate of the S&P500 Index, through January 31, 2020, as compiled by Mark Hulbert and Hulbert Ratings (www.hulbertratings.com).

To learn more fill out the form and we'll contact you directly.