Resources Connection: This Turnaround Has The Cash To Burn

Summary Resources Connection is a turnaround play, facing internal and external headwinds with sharply deteriorated financials and a plummeting stock price. RGP's new management is executing a transition plan targeting $12–16 million in annual savings, but revenue and margins remain under pressure. The company maintains a net cash balance sheet of $82.4 million, supporting its high but currently uncovered 6.3% dividend yield. RGP trades at a depressed 0.2x EV/S multiple; stabilization and a return to profit could drive rapid rerating, but near-term pain is likely. Smederevac/iStock via Getty Images Resources Connection ( RGP ) is a human resources firm selling temporary placements, outsourcing, and consulting services. In recent years RGP's business has deteriorated, and the stock price has plummeted along with it. RGP is a turnaround stock. Although turnarounds rarely work, RGP could This article was written by Antti Leinonen 434 Followers Follow I focus on investment ideas about companies that pay a (healthy) dividend and have a clear potential for capital appreciation. I like to find good businesses which reward shareholders. The shares of the company should be for a temporary reason undervalued in relation to its fundamentals, peers and/or historical levels. Technically and fundamentally there needs to be high odds for capital appreciation preferably by foreseeable catalysts. These elements provide a simple filter to invest in companies that reward shareholders in two ways. I often cover HVAC related stocks. That's the industry I was professionally involved in before turning into a full-time private investor. Analyst’s Disclosure: I/we have a beneficial long position in the shares of RGP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.