The 1980s were the most profitable decade in history for the stock market. Whether the 1990s will be equally kind is open to conjecture. But it certainly couldn't do any worse by that handful of stocks that somehow bypassed prosperity during the '80s. It is just such troubled issues that The Turnaround Letter specializes in.
Every month, The Turnaround Letter offers a generous helping of news and advice on companies in bankruptcy, on the verge of bankruptcy, or just plain stalled. Editor George Putnam III has become so good at separating the corporately terminal from the merely comatose that his "aggressive recommendations" have risen an average of 67 percent since he began making them.What better way to welcome the new decade than with a list of "big-bounce" candidates from Wall Street's acknowledged authority on fiscal resuscitation.
AMERICAN INTEGRITY, the supplemental health and life insurance company, "continues on the road to recovery," according to Putnam. "Nine-month income was 67 cents. The company's new Medicare supplement and long-term care insurance policies are selling well. We're raising our maximum buy price to $6."
BLACK & DECKER, long known as a maker of quality power tools, saw its product lines and stock price languish during the '80s. But a new management team has impressed The Turnaround Letter mightily by beefing up old lines and acquiring new ones. Putnam would buy the stock up to $26.
BRANIFF recently joined TL's "Two-Time Loser Club," making its second trip to bankruptcy court in seven years. Putnam doesn't care for the stock but thinks Braniff's Liquidating Trust Certificates are a bargain. "They're secured by aircraft leased to Bran-iff. There should be good capital appreciation down the road based on the value of the planes."
CROSS & TRECKER has incurred substantial losses in the past two years. But the new management team has instituted a major restructuring that focuses on the company's core businesses, metal cutting and factory automation equipment. The Turnaround Letter is also impressed by C&T's efforts to cut costs, reduce production time and shore up finances.
DATA SWITCH stock has been taking a drubbing recently for no good reason, says The Turnaround Letter. "The company has positive cash flow and is buying in some debt. It has reduced costs so that it should produce profits even if sales stay at current depressed levels. If revenues pick up, earnings should move up sharply."
OSHKOSH TRUCK's lower fourth-quarter earnings knocked its stock down. But The Turnaround Letter says it's "still very enthusiastic about the company's long-term prospects."
PLAINS RESOURCES is TL's latest recommendation. "Plains is not so much a turnaround as a survivor that may be about to make it big. After going public in 1981, it has spent the last eight years getting its financial house in order. While most small gas producers were struggling to avoid bankruptcy, Plains was actually growing modestly."
(The Turnaround Letter, Suite 801, 225 Friend St., Boston, MA 02114; monthly, $195 annually.)