Looking to spruce up your portfolio with a few promising turnaround stock picks? These value investing opportunities offer the potential for extraordinary stock profit.
Just as I am always hesitant to make a stock market forecast, I never like to pick out just a few of my purchase recommendations as favorites. Around this time of the year, however, I get persuaded to do both, but before turning to the stocks, it is worth talking a little about why I don't like picking favorites.
The main reason is diversification. A handful of stocks are not enough to provide adequate diversification to reduce risk--even though I pick stocks from different industries. Secondly, picking favorites from my contrarian investing newsletter's recommended list feels a little like picking favorites among your children--I like all our recommended stocks or else I wouldn't have recommended them in the first place! The third reason may verge on superstition: Often in the past when asked to identify a few favorites, those stocks have done badly for at least a while.
That wasn't the case in 2013, however. In fact, the five stocks I named as the Top Turnaround Stocks last year around this time gained an average of more than 90% by the end of 2013. With those caveats, here are a few of my favorites for 2014. Two additional stock picks are named in the January issue of my value investing newsletter.
Accuride Corp. (ACW): While orders for new trucks remain weak, this wheel maker has fixed its manufacturing problems over the last couple of years, and become leaner and more efficient. Among other things, it has upgraded equipment and shut down less efficient plants. As quality issues fade into the past and delivery times get more dependable, the company has been able to win more business. And with costs coming down, profit margins
