The Turnaround Gems

Michael Robinson
Editor, 180 Trader
April 2011

CPWM is a perfect example...

Based in Oakland, Calif., CPWM operates as a specialty retailer of casual home furnishings.

CPWM is a top-notch company. They've got about $869 million in annual revenue with a nice $200 million gross profit.

Before the recent recession, CPWM was trading at $19 per share. But, when the economy went south, CPWM got crushed... dropping all the way to $1 per share in February 2009.

Did CPWM deserve to take such a beating... a 94% fall?

No way.

You see, there was NOTHING fundamentally wrong with the company.

Sure, they have a few minor flaws that needed to be tweaked... but nothing to warrant the beating their stock price took.

Anyway, after digging into the CPWM balance sheet and conducting extensive interviews with management... I knew CPWM wouldn't stay at $1 per share for long...

In fact, I was confident they'd bolt back toward their normal price level... giving ground-floor investors big gains.

The big boys knew it too. A glance at government records indicated that institutional firms were buying CPWM shares, despite its weak showing.

On Feb. 12, 2009, CPWM flashed the rare buy signal, and I was confident a major upswing was close at hand...

Unfortunately, I couldn't recommend CPWM to my American Wealth Underground readers.

Why?

At $1 per share, CPWM was a "small cap" stock... so small that only a small fraction of my readers would have been able to get in at the $1 price before the added volume pushed the stock much higher.

Think about it: 9,500-plus American Wealth Underground subscribers rushing into a "small cap" stock could boost the price very quickly.

Because I want all my readers to have a chance to get in on my recommendations, I had to set CPWM aside.

Let me tell you right now, it was pure agony to let CPWM slide... because even though I couldn't recommend it, I knew it was a home run in the making.

And you know what? I was right.

In fact, in the following months, CPWM took off. The stock quickly doubled... and doubled... and doubled again! Take a look at the chart...

By August 2009, CPWM had tripled. And by December 2010, it had climbed back to $11 per share.

Folks who got in on the ground floor had a chance to see an elevenfold return on their money in less than two years.

That's 11 times your money in 24 months... Good enough to turn $10,000 into over $100,000.

I come across an opportunity in this sector about once a month. And I wish I could tell my American Wealth Underground readers about them. Unfortunately, these T-Gems are simply too small to recommend to my entire file of over 9,500-plus readers.

IDT is another example...

IDT is a telecommunications company based in Newark, N.J., right outside of New York City.

IDT is a solid company. They've got $1.4 billion in annual revenue with a big $290 million in gross profit.

Before the recession, IDT was trading at $40 per share... but when the financial crisis hit, the stock plunged to $0.80 per share in January 2009.

That's a 95% fall!

And here's the thing: There was nothing wrong with the company. Sure, they had some debt and overextended operations, but nothing that couldn't be fixed very quickly.

Like CPWM, they were simply a victim of circumstances.

Now, I took one look at IDT's balance sheet and knew the company was destined to bounce back with a vengeance.

But at $0.80 per share, IDT had a market cap of just $22 million... far too small for me to recommend to my file of 9,500-plus American Wealth Undergroundsubscribers.

In February 2009, IDT flashed the rare buy signal at $1.50, and you can probably guess what happened. Yep, IDT took off. Take a look:

In just 12 months, the stock jumped nearly 300%. And a year later, it hit $28... giving ground-floor investors a chance to see a stunning 1,700% gain.

That's 17 times your money... good enough to turn $10,000 into $170,000 in two years' time.

But as I said, I couldn't recommend IDT to my readers. Sure, some of them could have gotten in. But the majority would have missed out.

Since uncovering this hidden sector, I have come across a lot of stocks like IDT and CPWM when I run my weekly stock screens. In fact, I uncover at least one stock like this every month.

These are companies that have been unjustly punished by Wall Street. They appear to be "broken"... but in reality, they are strong and just waiting to surge back to normal price levels, making early investors a small and quick fortune.

And while not all of them go gangbusters, many of them deliver stunning triple- and quadruple-digit gains. For example:

• 3,400% on DTG
• 1,700% on IDT
• 1,080% on SHZ
• 2,425% on RDCM
• 2,150% on WNC
• 1,425% on AMRN
• 2,620% on HDY
• 1,000% on CPWM
• 1,500% on VHC
• 625% on FTK
• 1,200% on MITK
• 1,100% on ACW
• 1,200% on AVL
• 1,050% on NGD
• 850% on EEE
• 400% on IBCP
• 600% on GENE
• 350% on MSHL
• 950% on NFLX
• 1,050% on BSQR
• And dozens more...

Of course, these opportunities have already had their big run. It's too late to buy them now. And with the benefit of hindsight, we can see that on every single company this indicator was present.

But here's the good news for you:

I've just isolated the next T-Gem stock destined for big potential gains...

This company took a beating recently... and fell 90% from its normal price level. Currently it's trading at $3 per share. But I'm quite confident it won't stay at this price for long.

In fact, I believe this stock is an absolute rocket ship and will likely move back toward $30 very soon.

Listen: Even if it only makes it HALFWAY BACK to $15, folks who get in now could see a 500% gain. Heck, if the stock only makes it 10% of the way back, to $6, you could see a 100% gain!

While a double would be nice, I believe this stock has what it takes to go a whole lot higher.

Could this $3 stock be the next 10-bagger?

I believe it truly could.

And here's the best part: While this $3 company is too small to recommend to my 9,500-plus American Wealth Undergroundsubscribers... I've figured out a way to share it with you today!

This is a very exciting time for me. As you can imagine, I've been going near crazy the last couple years... watching these hidden-sector stocks skyrocket... and not being able to tell anyone about them!

I'm not about to let this next stock get away.

Most people aren't paying attention to this company yet... because it is dressed in its "ugly disguise." And because there is some risk involved, I'm sure this opportunity won't be right for all of my readers.

But already Goldman Sachs has bought substantial shares in this stock, and the rest of Wall Street is likely soon to follow.

In the coming months, I bet we'll see big institutions and mutual funds begging to buy this stock for $12... $15... even $18 per share.

I'd like to show you how to get in today for $3...

But first, let me introduce you to the lucrative sector that could hand you a potential fortune in the coming months...

The Overhaul Play

As you may have guessed, the sector I've been talking about involves a type of "turnaround" company. These companies are what I call T-Gems... or "turnaround gems."

If you follow the financial news, you probably have heard of turnarounds. Theold-style turnaround opportunity most people are familiar with involves a company that has fallen on hard times... is on the verge of going bankrupt... and conducts a radical makeover in an effort to save the company.

These are known as overhauls. The formula for this old-style overhaul play is fairly simple:

• Buy a broken company for pennies on the dollar...
• Hold the stock (usually for several years) while new management overhauls operations...
• Sell the stock when the problem is fixed, and the stock has returned to normal price levels.

When it works, the overhaul strategy can be highly lucrative...

I've been following the turnaround market for over 30 years, starting back in 1980 when I worked closely with Lee Iacocca while he was in the process of turning around Chrysler... and making investors a bundle of money.

I learned a heckuva lot about turnarounds from Iacocca, and I can tell you from personal experience, any time you can buy a company for pennies on the dollar... and later sell it for full value... you can make a fortune.

In fact, the Forbes list of America's richest people is chock-full of overhaul players. For example:

Leon Black has accumulated a $4 billion fortune from turning around broken companies.
Josh Harris has amassed a $1.5 billion nest egg from overhaul investments.
Mark Rowan has built a $1.2 billion bankroll through the overhaul game.
Wilbur Ross has a $1.7 billion net worth... built through the overhaul strategy.
Ed Ewing personally pocketed $44 million on a single turnaround play when he rescued an ailing shipping company.
Warren Buffett pocketed $10 billion in profits when he bought shares of ailing Coca-Cola and held on during Coke's resurgence...

I could keep going, but I think you get the picture. Bottom line: The old-school overhaul strategy can work. And again, it is responsible for some of America's biggest fortunes.

However, there are two main problems that make the overhaulunsuitable for individual investors.

First, it is highly risky. When a company is truly broken, finding and fixing the problem is not easy. For every broken company that returns to glory... there are 25 others that never make it back.

Second, it usually takes years for an overhaul company to return to normal price levels.

Consequently, the overhaul strategy is great for big Wall Street tycoons with deep pockets and years to wait on results.

But for most individual investors... it's simply too risky... and takes too long. While there is risk involved, for those who can afford to speculate, that risk can sometimes pay off big time.

That's why I'm so excited to introduce you to the world of turnaround gems... the exciting sector that could stuff your pockets with potential tenfold gains starting very soon.

The Turnaround Gems

The big difference between the overhaul plays... and the new turnaround gems is simple: Turnaround gems are not really broken. They only appear that way...

In reality, turnaround gems are quality industry leaders that have had their price unjustly decimated... and are poised for an explosive return to normal price levels.

On the surface, these stocks look like BAD INVESTMENTS.

But when you dig deeper, you can see that they are among the safest and most lucrative opportunities available today.

Think about it...

When you invest in turnaround gems, you are truly getting in near the bottom... on the ground floor. At the same time, when a stock has fallen 95%... its upside potential is truly staggering.

Consider this: When a stock has fallen 95%, it only has to recover by 5% to show a 100% gain. If it recovers by 30%, it shows a 500% gain. And if it makes it only HALFWAY back to its previous price level... it shows a 1,000% return.

So... if these turnaround gems are of such high quality... why do they plunge as much as 95% off their normal price levels?

In many cases, it's pretty simple: FEAR...

As you know, the financial crisis of 2009 changed the global financial landscape. While the market has recovered somewhat, fear and uncertainty are constantly looming in the background.

And you can be sure: The big institutional firms are terrified of being caught holding bad positions. Remember, during the market collapse of 2009, banks and investment firms were crushed as their stock holdings melted down.

Lehman Brothers was driven out of business. Same with Bear Stearns. Merrill Lynch as well.

And over 250 banks have failed since 2009...

These days, these big Wall Street firms live with their finger on the "Sell" button. And once the big boys start dumping shares, everyone follows suit.

The "flash crash" on May 6, 2010, is a perfect example. That's when the Dow plunged nearly 1,000 points in 45 minutes.

What happened? According to Reuters, a single firm dumped $4.1 billion in a single transaction... setting off panic selling.

This same principle can apply to individual stocks...

Consider what happened to Apple (APPL) on Feb. 14, 2011...

Apple had been sailing along when rumors started flying around that Apple founder and CEO Steven Jobs was returning to the hospital. This news made the big boys nervous about Apple's future... and widespread selling kicked in.

Apple lost $10 billion in market capitalization in four minutes!

(By the way, if you are thinking of buying Apple, don't. I've got an opportunity much better that I'll tell you about in just a minute.)

Point is, the first sign of downward momentum in a stock typically means anoverreaction by the big institutional players. Once one firm starts selling, everyone else panics and follows suit.

And you can't blame them. Nobody wants to be the next Lehman-Brothers-style casualty.

Think about it...

These guys are holding millions -- even billions -- in single stock positions and they aren't taking any chances holding a stock that starts to fall.

This is exactly what creates a turnaround-gem opportunity...

A perfectly solid company announces they missed quarterly earnings, or maybe that they have too much debt, or that they've overextended their operations.

In most cases, these problems are minor... and easy to fix.

But Wall Street's big firms are trigger-happy... and simply don't want to hold companies that are showing any weakness.

Consequently, when the company underperforms in any way, fear kicks in... the big boys dump their shares... and drive prices into the ground.

This means that quality companies are crushed beyond any reasonable level. Consequently, you end up with companies that look horrendous on the surface... but in reality are fantastic bargains selling for pennies on the dollar.

And here's the important thing for you to understand: It is their "ugly duckling" disguise that makes them so lucrative.

DTG is a great example...

Based in Tulsa, Okla., DTG operates a rental car business.

They are a strong company, with over 600 locations and over $1.5 billion in annual revenue... and gross profits of over $350 million.

Now, back in 2007, the company was trading at a reasonable $50 per share. However, starting in 2008, Wall Street went sour on the stock... and it plunged all the way to $0.80 per share... an incredible 98% drop.

Most people wrote this company off for dead. But a close look at their financial statements... and discussions with senior management... told me one thing: There was nothing fundamentally wrong with this stock!

And a visit to 100 F Street in Washington, D.C. confirmed my suspicions: The big Wall Street players were buying big blocks of this stock, despite the fact that it looked like a bad investment.

I knew in my heart DTG wasn't going to stay at $0.80 per share for long. And I was dying to recommend the stock to my American Wealth Undergroundreaders.

But at $0.80 per share, DTG had a market cap of only $30 million... Alerting my subscribers to the opportunity would have launched the stock into the stratosphere in no time.

So... I had to keep my mouth shut and watch.

In April 2009, DTG flashed the rare buy signal at $1.50 per share... and you can guess what happened next.

Take a look at the chart:

DTG took off like crazy... all the way back to its previous price level of $50 per share.

Folks who got in at $1.50 could have seen a 3,400% gain... good enough to turn $10,000 into $330,000!

Amazing...

And here's the good news: The $3 stock I'm currently tracking is positioned just like DTG before it launched to over $50 per share.

As you'll see in a moment, the chart looks almost identical.

And get this: The $3 stock is flashing the rare buy signal that DTG flashed just before it skyrocketed.

I'm telling you, this company is destined to move fast... and I wouldn't be surprised to see it soar toward $30 as early as next month.

Now, like other turnaround gems this company is too small for me to recommend to my 9,500-plus American Wealth Underground subscribers. And I'm sure this type of speculative opportunity isn't right for all of my readers.

But, because the upside potential on this opportunity is so phenomenal, I've figured out a way to share it with you today.

You see, although this stock is too small for American Wealth Undergroundsubscribers... it is something I can recommend to a much smaller group.

That's why I've decided to launch a brand-new research service (called180 Trader) specializing in finding explosive turnaround opportunities that have the potential to show tenfold gains.

The Five Keys to Turnaround Riches

I monitor the markets on a daily basis... and using my proprietary stock screens, I narrow down a field of roughly 10,000 stocks to about 275 potential turnaround companies.

Of course, while there are hundreds of companies that appear to be turnaround candidates... true turnaround gems must meet a specific set of criteria before I will consider recommending the company to my readers.

The last thing I want is to recommend a company that is going to flatline for months.

It's far better to get in at the precise moment a company begins its ascent back to higher ground. Let me give you an overview of what it takes for me to give these stocks serious consideration:

Turnaround Key No. 1: They Aren't Really Broken!

As I mentioned, the key to the old-fashioned overhaul strategy is to find a BROKEN company and fix it.

This works. But it is risky... and takes a long time to realize a return on your investment.

When I select a turnaround gem... I'm NOT looking for a broken company. That's the first secret about this new sector: These companies aren't really broken!

They only appear that way because their stock price is low and they may be receiving negative press.

I won't consider recommending a company that is not fundamentally and financially sound. This helps limit the risk.

Before recommending a company to my readers, I spend weeks of due diligence scrutinizing the company's balance sheet, income statement... as well as conducting an intensive investigation using my network of inside sources.

Only when I feel that the company is financially sound will I consider making a recommendation to my readers.

However, sound financial health is only the first step in meeting turnaround gem status...

Turnaround Key No. 2: Major Dominant Advantage

Financial stability is good, but the company must also possess a dominant advantage in its own industry sector before I will consider it worthy of turnaround gem status.

If the company is "just another auto parts company"... or "just another software company"... or "just another mining company"... then I'm NOT interested in recommending it to my readers.

I insist that the company be DOMINANT before giving it serious consideration.

Maybe they have a patent. Or maybe a major contract. Or maybe they have a powerful brand that wipes out the competition.

But for me to give these companies serious consideration, they need a powerful competitive advantage that will enable them to prosper in both the short and long term.

In other words, I don't want to recommend a stock just because it's at a low price. I want my readers to have the opportunity to get into a top-quality company... an industry leader... for pennies on the dollar.

In short, I'm looking for strong industry leaders that are positioned for explosive growth. And I'm looking to recommend them for a fraction of their full value.

Now, let's take a look at WHY these strong companies are available for pennies on the dollar.

Turnaround Key No. 3: Minor Flaw Causes 90% Plunge From Normal Price Levels

Of course, if everything were perfect with the company, the stock price would be at full value.

But as I demonstrated before, in this new market environment we live in, it doesn't take much to make a stock plunge.

Again, the big institutions overreact to the slightest bit of bad news... and can drive a perfectly good stock into the ground.

Of course, there is usually a minor flaw that sets off the selling. Could be too much short-term debt. Could be overextended operations. Could be the company missed their earnings target by a couple pennies.

In other words, there is some chink in the company's armor... that causes it to plunge by as much as 90% or more.

Again, if there is a major problem with the company, I'm not interested. I want strong companies that have had their prices unjustly beaten down.

That's where the opportunity lies...

Turnaround Key No. 4: The Big Money Is Quietly Buying!

Wall Street's big institutions are very cautious these days. After seeing Lehman, Merrill Lynch and Bear Stearns run out of business... they don't want to get caught holding any bad investments.

Consequently, when a company takes a fall... Wall Street turns its back and cuts off investments... which further drives the stock down.

But the same is true when the stock recovers...

Once the big firms start to realize that a company is financially sound and has upside potential... they jump back in very quickly.

In fact, once the big institutions spot a company selling for pennies on the dollar, they often pour big money into a stock, lifting it back to normal price levels very quickly.

The key is to get in after the big money starts to flow... but before it lifts the stock too high.

Let me show you exactly how to do that...

Turnaround Key No. 5: "The Triple Cross"

I said it before, and I'll say it again: I don't like to take chances.

One of the biggest mistakes involves people putting money in a company and waiting.

I prefer sure things. That's why I use a proprietary indicator known as the "Triple Cross."

This signal is rare. It requires three technical indicators to converge. Again, this doesn't happen often, but when it does, it is a solid signal that a stock is likely beginning an explosive bolt upward.

In this letter, I've shown you numerous examples of turnaround gems that have delivered tenfold gains or more.

In every case, the rare buy signal, known as the Triple Cross revealed itself right before the stock took off.

Let me give you an example...

A Turnaround in 90 Days

SHZ is a mining company that was trading around $10 before it got crushed in the market crisis.

The thing is, the company was rock-solid and met all of my turnaround gem criteria.

But take a look how long it stayed down... from early 2009 until late 2010...

People who put money in back in 2009 could have waited two years for a return. And the truth is, most individual investors don't wait. They end up selling out before the gains kick in.

But here's the thing, in September 2010, the Triple Cross signal showed up for SHZ. At this point, you could have gotten in on SHZ at about $1 per share.

Now, here's a mistake a lot of would-be turnaround players make: Getting in too early.

And it's tempting. In the case of SHZ, you could have gotten in at $0.25 back in 2009.

But in my opinion, the risk would be too great because without the indication of the Triple Cross, there is no telling whether the stock is really turning.

The better way to play it is to wait for the Triple Cross, pay a higher price, but have the confidence that the company is most likely at the beginning of a complete turnaround.

In this case, a purchase at $1 could have skyrocketed $10.84... a tenfold gain in three months.

When you have the Triple Cross telling you what to do, it's hard to go wrong.

Take a look at these gains. In every case below, the Triple Cross indicated that the stock was ready to skyrocket.

• 3,400% on DTG
• 1,700% on IDT
• 1,080% on SHZ
• 2,425% on RDCM
• 2,150% on WNC
• 1,425% on AMRN
• 2,620% on HDY
• 1,000% on CPWM
• 1,500% on VHC
• 625% on FTK
• 1,200% on MITK
• 1,100% on ACW
• 1,200% on AVL
• 1,050% on NGD
• 850% on EEE
• 400% on IBCP
• 600% on GENE
• 350% on MSHL
• 950% on NFLX
• 1,050% on BSQR
• And dozens more...

I could go on and on and on...

With the benefit of hindsight, we can see that on every single company this indicator was present. It is as close to a sure-fire signal that profits are very likely close at hand.

Now, how do we know when a stock is showing the Triple Cross?

I use a complex combination of fundamental analysis and technical indicators. Because of the proprietary nature of this system, I can't give you the details in this letter.

I've spent years developing the Triple Cross indicator, and I'm simply not going to give it away. But I will tell you this:

I just isolated the next turnaround gem, and it's already showing the Triple Cross...

This company meets every single one of my five-point formula for a turnaround gem... including the Triple Cross.

This company previously traded at $30... it is now available for a modest $3. I am absolutely confident that in the coming weeks, this company will likely soar back toward $30...

And get this: Although this stock is too small to share with my 9,500-plusAmerican Wealth Underground readers... as a Charter Member of my new research service 180 Trader, you will be able to get in on the ground floor.

I'll tell you how to get all the details on this stock in just a moment. I'll show you how to reserve 10 months of 180 Trader, at an almost unheard-of discount. But first, let me show you why I'm so confident this stock is ready to skyrocket...

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.