Just as there are “hidden gems” out there in the market waiting to be bought, there are also plenty of stocks that are mispriced and due for a bounce. Arnie Alsin of Alsin Capital was on “Street Signs” to shed light on some stocks he said are due for a big turnaround.
First up on Alsin’s list is Georgia Gulf . The chemical company is currently trading at around $19.50 per share. Alsin has a price target of over $50. How does he see such a drastic turnaround happening? Well, Georgia Gulf recently finished a major acquisition of Royal Group, and took on a lot of debt in the process. Alsin says some of the company’s woes come from the depressed housing market, but the real story is hidden in its financials. Looking at the company’s financial statements, Alsin found that the stock market values the company at about $660 million. He expects Georgia Gulf to have $150 million of free cash flow over the next year. So as it uses that cash to pay down the debt, its real market value will be realized and the stock will shoot up, he says.
Alsin’s second turnaround pick is Gateway . The computer maker has seen better days – trading now around $2 per share, although Alsin says it is mispriced at this quote. Alsin predicts the stock will go to $5 in the wake of new management restructuring plans. He notes that the peer group hasn’t been performing especially well, so all Gateway has to do is get to half the operating metrics of its peers like Dell and Hewlett-Packard and the stock could go north of $5.
Alsin’s final pick of the segment is 1-800-FLOWERS . The stock currently is hovering just below $7 and he has a target of $12. He says the company is well of its lows and entering high-growth mode. The company is becoming more efficient and it is expanding, he says. A new management team has put cost controls in place where the focus has moved from generating revenue to generating earnings. By the end of 2007, Alsin expects 1-800-FLOWERS to be trading between $11 and $12.