Although it’s not always easy to do, you can make a truckload of money getting in on the right turnaround situation.
Most investors typically look for stocks that are going up. True enough, very often, you can do well jumping on the bandwagon. Going with the trend (momentum investing) does work if you can find the right stocks and stay on top of your positions.
However, I think you can do just as well with stocks that are down in the dumper. When you come across a long-term chart of a company that’s had previous success, but has then experienced significant troubles, it’s worth further investigation.
Case in point is Amerigon Inc. (NASDAQ/ARGN). This company was once an American success story… and then it all fell apart. Now, the company’s got its business plan right, and it’s signing up new customers left, right, and center.
Dearborn, Michigan-based Amerigon has developed a proprietary “Climate Control Seat” (CCS) product for sale to automotive and truck original equipment manufacturers (OEMs).
The company’s CCS product is designed to provide cooling and heating to seat occupants through an active thermoelectric-based
temperature management system. The company is also developing more efficient thermoelectric devices (TED) that feature twice the efficiency of current equipment.
Amerigon maintains sales and technical support centers in Los Angeles, Detroit, Japan, Germany and England.
In a recent press release, the company announced that it expects to generate revenues of approximately $50 million for the year ended December 31, 2006. This would represent growth of over 40% as compared to the previous year. Revenues for fiscal year 2007 are expected to grow between 15% and 20%.
If you have the chance, pull up a long-term chart on Amerigon. The stock chart clearly illustrates the turmoil the company has experienced over the last 10 years. It also illustrates how well investors could have done by speculating on the company’s turnaround, especially considering how many cars now offer the option of temperature-controlled seating.
Generating business success is all about having the right business plan and the right product at the right time. Amerigon has finally got it right, and its business is now great.
As an investor, you can do just as well, if not better, speculating on a company’s turnaround as going with the trend. Turnaround investment opportunities usually take more time to develop, but when they go up, you can often make big bucks.