Volvere (LSE: VLE) is Latin for “to turn about,” so it is fitting that this human-capital turnaround specialist makes this trio of turnaround speciailust. The company is run and owned by brothers Jonathan and Nicholas Lander, the CEO and CFO/COO respectively. Combined, the brothers own 39% of the company.

The brothers have spent their lives working in people-driven sectors like Law. These sectors often get a bad rap from investors because any competitive advantage is tied to the members of staff, who can easily defect to a rival, become demotivated, or retire.

The Landers love these businesses precisely because everyone else hates them. Typically, Volvere is approached by banks or the management teams of struggling businesses, placing it in a strong negotiating position.

The sheer number of businesses on offer allows management to be choosy, typically only indulging in one or two deals a year. By buying distressed businesses and fixing them up, the company has compounded book value at 14.4% p.a since 2002 for a total increase of 513%.

How? The process goes a little like this. The Landers identify a single-digit P/E company, which is often penniless or nearly so, pays down debts, injects cash, incentivises staff, then hopefully reaps the rewards of a successful turnaround.

Right now, Volvere is valued pretty much at book value, which means the market is placing no value on the Landers’ proven ability to create shareholder value. This looks too cheap to me, so the shares could be worth a second look.

Judges Scientific

Like Volvere, Judges Scientific (LSE: JDG) makes its living acquiring whole businesses. Unlike Volvere, the company invests for the very long term, aiming to grow assets organically after acquisition.

As the name implies, the company specialises in scientific testing and measurement equipment and is very choosy in acquiring the very best firms in this category. Since 2003, it has transformed from a £4m investment vehicle to a £111.5m business.

The company has struggled in recent years due to low levels of governmental research spend and lumpy orders, but I believe now could be a good time to invest. The company managed to acquire three companies last year, for mid single-digit P/Es. As long as these companies continue to perform adequately, that’s a bargain price. If they excel, Judges may look very underpriced in hindsight.

Deep value vs debt

Gulf Marine Services (LSE: GMS) operates a fleet of “self-propelled, self-elevating accommodation jackup barges,” which are essentially offshore oil maintenance ships with on-board accommodation quarters that allow a team to live and work on a rig easily.

With customers like Shell, Total and Saudi Aramco, clearly Gulf Marine Services is doing something right. The maintenance and engineering services provided by GMS are necessary come rain or shine, so a certain amount of business is guaranteed, but the combination of the oil price crash and a reduction in capex by oil majors has hurt it.

The shares have fallen nearly 50% since January 2015 as aggressive expansion plan suddenly became underfunded. Debt has ballooned to near-crisis levels.

While the company’s fleet expansion was costly, the ships are highly profitable once operational. The company makes 50% operating margins, indicating cashflow could increase drastically, maybe even double, once this flurry of investment ceases.

I believe the company could easily re-rate 20%-30% higher if business continues to be smooth.

The post I’d buy these 3 despised stocks for turnaround profits appeared first on The Twelfth Magpie.

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Zach Coffell owns shares in Judges Scientific. The Motley Fool UK has recommended Judges Scientific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Indeed, there are many studies which show that value investing has outperformed all other methods for decades and following a value strategy has helped billionaire Warren Buffett build the reputation and fortune he has today.

While I can’t give you the secret to guaranteeing riches like Warren Buffett, here are three attractive looking value stocks that may help put you on the path to investing success. 

Pipes and plumbing

Norcros (LSE: NXR) is, in my opinion, one of London’s most undervalued stocks. The company manufactures and sells bathroom products such as showers, taps and tiling equipment and has ambitious growth plans. 

However, for some reason, the market doesn’t trust management to hit growth targets or even hit annual profitability targets. Nonetheless, management has continually proved the market wrong. 

Net profit has grown at an average compounded rate of 14.2% since 2011. Analysts are expecting a slight fall in earnings per share for the year ending 31 March thanks to high costs from the integration of a new acquisition. Still, even though earnings per share are expected to fall 7%, the shares trade at a forward P/E of only 6.7 and support a dividend yield of 4.2%, a valuation that seems too hard to pass up for a business that’s achieved such an impressive historic growth record.

Oil troubles 

Gulf Marine Services (LSE: GMS) is one of the many companies that has suffered from the decline in oil prices over the past few years. The company is expected to report a net profit of only £33.5m for 2017, more than 50% below its 2014 peak of £75m.

Gulf Marine operates self-propelled and self-elevating support vessels, which are used by the oil and gas industry to maintain and service offshore oil platforms. Other companies that operate offshore platforms also use the company’s services, so Gulf Marine has customers outside the oil and gas sector. 

Even though the company has sailed into stormy waters recently, it’s likely that over the long term the demand for support vessels will return to normal levels and when it does, Gulf Marine’s profit should go back to 2014 levels. 

The shares currently trade at a forward P/E ratio of 9.3 and a price-to-book ratio of 0.6. If you have the patience to wait for demand to pick up, Gulf Marine could be an attractive long-term investment. 

Come fly with me

Aircraft leasing firm Avation (LSE: AVAP) has seen the value of its shares rise by around 50% since August of last year, but even after these recent gains, the shares still look cheap. Indeed, at the time of writing shares in Avation trade at a forward P/E of 7.2 and a price-to-tangible book ratio of 0.8. City analysts expect the company’s earnings per share to grow by 5.7% this year. 

Over the past five years, the company has grown earnings per share at a steady rate of 13.1% per annum on average. With a high single-digit P/E it looks as if the market is ignoring Aviation’s impressive growth record.

The post 3 small-cap value stocks set for big things in 2017 appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns shares of Norcros. The Motley Fool UK has recommended Norcros. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Retail riser

Clothing giant N Brown Group (LSE: BWNG) saw its share price collapse 14% between last Monday and Friday, the market greeting the firm’s latest results with light panic.

N Brown slumped after advising that pre-tax profits fell 7.8% in the year to February 2016, to £72.2m, due to difficult trading conditions and huge restructuring costs. And worryingly the company advised that “challenging market conditions” are likely to persist for the fashion sector looking ahead.

The City remains convinced that N Brown is a firm ‘on the up’, however, and expects the retailer to chalk up a 6% for the year to February 2017 alone, resulting in a terrific P/E rating of 11 times. And further bottom-line growth is anticipated beyond the current period.

Meanwhile, income hunters will surely be attracted by a dividend yield of 5.4%. I believe N Brown’s long-running transformation drive leaves it in great shape for the coming years, particularly as ‘e-commerce’ activity continues to explode.

Cast adrift

I am not so bullish over the earnings prospects of Gulf Marine Services (LSE: GMS), however. The stock conceded 9% of its value last week, meaning the support-vessel provider has seen its share price halve since the start of 2016.

And I expect Gulf Marine Services to keep on sliding as conditions in the oil sector worsen, a situation that it likely to lead to further capex scalebacks from large and small fossil fuel producers alike. Indeed, Gulf Marine Services warned last month that group EBITDA is likely to sink 15%-20% year-on-year in 2016 thanks to continued sector turbulence.

And investors should be concerned by the barge provider’s fragile balance sheet, too. Net debt rang in at an eye-watering $398.9m as of December, rising from $273.6m a year earlier. And Gulf Marine Services expects debt to increase to $425m by the close of the year.

Many bargain hunters will be tempted by a mega-low P/E rating of 4.6 times for 2016 — created by City expectations of an 18% earnings slip — as well as a handy 3.1% dividend yield. But I believe the worsening supply dynamics whacking the oil market still make Gulf Marine Services an unappealing stock pick, even at current prices.

A beaming stock pick

Electricity network operator National Grid (LSE: NG) also fell foul of market movements between last Monday and Friday, the share dipping 5% during the period and stepping back from record highs above £10 per share.

However, I see this as nothing more than profit taking and expect the power play to resume its trek higher. Not only is there enough fear concerning the global economy to keep ‘defensive’ stocks like National Grid on the boil, but I believe the firm’s steady expansion in the UK and US should underpin fresh share price momentum well into the future.

Indeed, the City expects rising revenues to underpin earnings growth of 2% in the year to March 2017 alone, resulting in a decent P/E rating of 15.3 times. And National Grid provides terrific value for dividend hunters, too, the firm’s progressive dividend policy chucking out a market-mashing yield of 4.7%.

The post Will last week’s losers National Grid plc, N Brown Group plc & Gulf Marine Services plc storm back? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.