If you’re looking for big yields, one area of the market provides a rich hunting ground: turnarounds. Regular readers have heard us mention these before. Turnarounds involve buying companies that have fallen on hard times, identifying the problem, and working a plan to reengage the business. Of course, these issues come with more risk. But for those that call it right, you can lock in oversized yields. Not to mention that turnarounds often result in tidy capital gains.
Case in point today is Sunoco LP (NYSE:SUN), which yields almost 11%. Sunoco operates two businesses. On the wholesale side, the partnership delivers gasoline to some 8,000 or so stations across the country. The retail side, on the other hand, owns and operates gas stations, as well as the accompanying convenience stores. Over the past few years, management has spent billions of dollars on acquisitions. While these deals grew the size and scale of operations, it also left a big debt load. Analysts downgraded shares, worried that executives might have to slash the distribution.
Source: Income Investors
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- The Next Great Company
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