This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Top 10 Turnarounds for 2006, Part 1

This column was originally published on RealMoney on Dec. 1 at 7:01 a.m. EST. It's being republished as a bonus for readers.

The first two installments of my Top 10 Turnarounds list, posted at the end of 2000 and 2001 , were full of good stock ideas. Between the two columns, there were eight multi-bagger ideas, three companies that were acquired at healthy premiums and only two ideas that lagged the S&P 500.

Unlike the first two lists, though, this one is unlikely to have nine of its Top 10 Turnarounds outperform. That's because the competition, the S&P 500 index, is much more attractively priced. But while the relative performance may not be as good with the current list of turnarounds, I believe it has the most long-term upside potential of the three lists.

In this, the first of a two-part column, I'll highlight five of the Top 10 Turnarounds for 2006. Look for part two this time next week.

Molson Coors

Since the No. 1 Canadian brewer, Molson, and Adolph Coors merged early this year, the new stock, Molson Coors (TAP - Get Report), has languished between $60 and $80 per share. Now trading at $66, this stock is very low-risk, with an impressive two- to three-year upside valuation potential of more than $100 per share.

The company is up against a difficult macro backdrop, with sluggish beer demand, but there are a lot of operational levers for management to pull to unlock value. Restructuring and right-sizing are going to be the name of the game over the next few years, as merger-related synergies are realized and cost-savings plans are implemented. There is a good chance that my valuation target will be too low, especially if current operating margins of 11.5% eventually are taken to 15%, a level that this operating structure can easily support.

DreamWorks Animation

Since trading in the low $40s after its IPO last year, DreamWorks Animation (DWA - Get Report) has taken a hit and now trades around $25 per share. My valuation target is in the mid-$40s by 2007. Even at a mid-$40s quote, the company would be valued at a significant discount to key competitor Pixar (PIXR).

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
PSS $21.72 0.00%
OMX $15.26 -0.26%
DWA $21.84 0.21%
GPS $42.03 4.10%
MW $50.35 0.22%


DOW 18,206.75 -7.67 -0.04%
S&P 500 2,108.12 -2.62 -0.12%
NASDAQ 4,977.0880 -10.8020 -0.22%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs