As many companies have spent the past few years rebuilding
theirsales and profits after a deep slide in 2008 and 2009, a
handful of companies are still struggling to regain altitude.
Their ownincome statements were decimated by a string of
self-induced wounds, and most investors have chosen to shun
Yet three badly wounded firms are now on the mend. As they
complete theirturnaround plans, considerable share pricegains may
1. NII Holdings (Nasdaq: NIHD)
This provider of wireless telecom services in Latin America was
done in by brutal price wars and a debt-ladenbalance sheet . The
price wars deeply cut intocash flow , which raised serious
concerns about NIHD'sability to pay off itsloans . By the end of
2012, totaldebt stood at $4.9 billion, and the company's annual
net interest expense approached $400 million ayear .
Those debt concerns pushedshares down from $40 in early 2011
to just $4 this past spring, asbankruptcy concerns started to
circulate. In response, management announced plans to sell its
Peruvian division for an estimated $400 million. That would not
only bring in some badly neededcash -- it would also give a sense
that NIHD's other operating divisions were worth more than the
share price was reflecting.
At the time, management noted that otherasset sales in
Argentina and Chile were possible, which would further clean up
the balance sheet and allow management to focus on the more
lucrative Brazilian and Mexican divisions. Those comments quickly
catapulted shares above $7, aided in large part by a massiveshort
squeeze , and further asset sales a few weeks later pushed shares
past $9. However, shares have drifted back down below $6.50 in
recent weeks on concerns that intensely competitive markets could
hamperpricing power and cash flow.
Yet there's acatalyst in place for a rebound back to that $9
level. New management, which took the reins in early May, is
tasked with boosting cash flow -- or selling assets -- in the all
of the company's local divisions.Analysts at
Wells Fargo (
suggest that the base of assets are worth $13 to $15 a share, net
of debt, and even if you apply a hefty discount to that view,
thisstock would still move toward the $10 mark when further asset
sales are announced.
2. Maxwell Technologies (Nasdaq: MXWL)
Back in 2011, this company's "ultra-capacitor" technology gained
considerable buzz, pushing its stock above $20. But a slowdown in
demand in Europe and China, coupled with anaccounting scandal,
nearly kicked this company off of theNasdaq .
I recounted this company's challenges in a recent column on
our sister site, ProfitableTrading.com, and my key conclusion
still stands: Despite the mess created by the accounting scandal,
"Maxwell's business is still holding its own right now, and the
great promise for its ultra-capacitors remains fully intact." At
this point, investors need to await the second-quarter
conferencecall , which should be held in four to six weeks. Once
it becomes clear that Maxwell is closer to putting its accounting
troubles to bed, this stock could see a solid reliefrally
3. Titan International (
This maker of massive tires used in mining and construction
appeared poised for a solid 2013 -- until its key customers
decided to make its life miserable. Customers such as
and others spotted a slowdown for their own large equipment, and
in a bid to build cash flow, decided to unload a hefty amount of
accumulated tireinventory on theopen market .
Analysts predict Titanwill suffer a brutal summer as orders
dry up. Estimates for the second and thirdquarters have been
slashed, and these analysts now see Titan earning around $1.70 a
share this year, well below the $2.30 a share forecast in place a
few months ago. Adding insult to injury, the slowdown in demand
will blunt the solid momentum analysts had expected Titan to
generate in 2014, as itsearnings per share was expected to
approach $3. Now, that view is closer to $2 a share.
Still, the long-termearnings power remains in place. Tires
wear out, after all. And the stock's quick plunge of nearly 40%
from February, to a recent $16.50, more than accounts for the
expected near-term weakness.
Risks to Consider:
These businesses also operate in economically sensitive
environments, and each derives a large portion of sales
inemerging markets , which may or may not be on the cusp of
Action to Take -->
All three of these companies will discuss theseissues on their
upcoming conference calls, and if investors develop a sense that
the worst of their problems may have passed, then the heavily
discounted shares should see solid newsupport .
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