Amazon.com, Inc. (AMZN): Four Ways To Find True Turnaround Stocks

3. Buy the Company, Not the Sector

How many times have you been asked over the years: “are you in tech stocks?”Tech stocks have been hot for the last decade. In the 1990s it was dot-coms and drug stocks. In the next decade it will be something else. Don’t get fooled into thinking that entire sectors are “good” or “bad.” Technology, for instance, usually means a vast universe of different businesses, from semiconductors to software developers to anti-virus companies and social media empires. The semiconductors could be struggling even as the social media companies are on fire. Conversely, just because a sector is “hot” doesn’t mean that there isn’t a company within it that is finally turning it around — just possibly later than its peers. Be sure you look at the individual merits of a company. A big turnaround stock can just as easily be found in a red-hot sector as one that is currently out of favor.

4. Use the Zacks Rank

Our research team has long noted that true turnarounds can be detected when estimates of a company’s earnings suddenly reverse from downward to upward. It’s a very good sign when stocks leapfrog from lowly Zacks Rank #5s and #4s all the way to Zacks #1 Ranked Strong Buys. Since 1986, our proven Zacks Rank stock-rating system has nearly tripled the S&P 500 with an average gain of +26% per year. That performance is fully documented and independently verified by Baker Tilly, an independent accounting firm.Shortcut to True Turnarounds If you want an easy way to keep tabs on the few turnarounds you can trust, and a more effective way to take advantage of the Zacks Rank, I invite you to take a look at my alert service, Turnaround Trader that follows exciting turnaround stocks with strong valuation and growth factors. But an even better way to stay abreast of the latest turnaround stocks — plus all of Zacks’ private buy and sell recommendations — is by looking into our Zacks Ultimate trial.

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– Tracey Ryniec

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