4 turnaround stocks for the smart investor

Last week the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) lost 0.5% and once again fell below the psychological 5,500 point level. Despite the overall decline in the market there were a number of high profile stocks which bucked the trend and headed higher.

Here are four stocks which all made impressive gains in the past week but they could still have further to run.

Karoon Gas Australia Limited (ASX: KAR) surged 33.7% after Origin Energy Limited (ASX: ORG) entered into an agreement to purchase Karoon’s 40% stake in two offshore gas field permits for approximately US$800 million. It appears fund manager Paradice Investment Management must like the look of the deal and Karoon’s potential, with the fund manager upping its investment in Karoon post sale.

Despite no news, GUD Holdings Limited (ASX: GUD) jumped 9% last week to trade above $5.80. The stock was last at these levels after releasing its interim results in late January which the market initially reacted positively to but subsequently the share price fell away. Full year guidance from management remains for a 20% fall in EBIT. Given no obvious reason for the 9% jump, it could be a case of buyers simply believing the stock had become ‘oversold’.

Shareholders in UGL Limited (ASX: UGL) enjoyed some positive news flow last week which sent the share price up 8.5%. Firstly it was revealed that private equity firm TPG had approached the company about purchasing UGL’s global property services business, DTZ. Then two days later UGL announced it had received a new four-year asset and facilities contract valued at approximately $280 million – good news indeed!

Having sunk 36% since the beginning of 2014, shareholders in marine logistics firm Mermaid Marine Australia Limited (ASX: MRM) would have welcomed the 6.3% gain in share price last week. The stock has been sold down in the wake of a capital raising struck at $2.40 per share which was used to fund a $550 million acquisition. Once again, it appears some investors may have taken the view that the stock has been ‘oversold’.

While the ASX trades at a multi-year high, these four stocks are still trading well below their respective 52-week highs. Having jumped last week, investors should be alert to a potential change in sentiment which could drive these four stocks higher still.

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Motley Fool contributor Tim McArthur owns shares in Origin Energy Ltd.

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