Accuride Corp.

01/22/2014 8:00 am EST

Focus: STOCKS

George Putnam

Editor, The Turnaround Letter

 

Our top speculative pick for 2014 is a company that produces wheels and related components for trucks and other commercial vehicles, suggests George Putnam, editor of The Turnaround Letter.

Because of a very leveraged balance sheet, the company—Accuride Corp. (ACW)—could not survive the 2008-09 recession, and it filed for bankruptcy in October 2009.

The company emerged from Chapter 11 in February 2010, with a much improved balance sheet, but then manufacturing problems surfaced at several operating units, which reduced volumes, hurt quality, and raised costs.

Just as the company began to get a handle on the production issues, orders for new trucks softened, causing results to decline further.

Accuride has been investing heavily in its operations, with the result, that it has not only fixed the earlier problems, but also become leaner and more efficient. In addition to streamlining its operations, the company is also selling non-core assets to re-focus on wheels and related components.

While industry wide sales have remained soft in recent quarters, longer term trends look favorable. The demand for trucking services is on the rise at the same time as aging truck fleets will require higher replacement levels.

Accuride is now well-positioned to profit from any upturn in demand for trucks and other commercial vehicles.

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