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One of the most successful ways to uncover the best investments for the long term is picking turnarounds.
This active investment approach – when done right – has powered record returns for many successful investors. Private equity funds have generated massive returns this way.
In spite of this, it remains underutilized by most individual investors.
True, turnaround investing is not for everyone. There are some reasons people tend to shy away from it…
First, finding the best turnaround investments requires more patience than trading or flipping stocks over the short term. A turnaround stock usually takes a full market cycle, or three to five years, to show results.
Second, you have to be prepared to live with price volatility. There's often high volatility during the turnaround period.
Also, it's highly unlikely you will time things so perfectly that the stock doesn't slip more before it climbs higher.
However, if you have the patience and money to play with, turnarounds can be some of the best investments you'll ever make – and provide the type of returns most short-term investors will never realize.
As outside investors we can't have the same influence on a stock's price as a large hedge fund or private equity investor would when it took a stake in a turnaround. But, we can still own a diversified portfolio of turnarounds with strong potential. A batting record of .500 or higher in your selections should lead to spectacular returns over time.
Looking at the market now, I picked a few companies that have the potential to be the next best "turnaround" investments out there.
Here's that list, along with why they look so appealing…
Best Investments 2013: Three Turnarounds with Long-Term Potential
My first turnaround investment is an engineering and construction company that builds complex offshore platforms for the oil and gas industry. It constructs floating and fixed facilities, as well as pipelines.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of "Max Wealth" and Heatseekers.