Do you know how well your favorite companies are being run? How can you tell?
Sometimes investors forget that when they're buying a stock, they're investing in an ownership share of a company. The management of a company is paramount to its success, so as a potential company owner, stock investors should look into how companies are being managed. The implications to stock performance are big.
One way to gauge this is by considering the corporate governance policies of a company. These policies dictate how a company runs with regard to its board of directors, the board's contact with management, and shareholder rights.
To illustrate this, we ran a screen on underperforming stocks trading within 10% of their 52-week low.
Institutional Shareholder Services (ISS) gives ratings for four areas of corporate governance on risks related to the board, the audit committee, the compensation committee, and shareholder rights.
We screened these underperforming stocks for those receiving "low risk" ratings in all four corporate governance categories from ISS.
ISS believes that these companies have strong corporate governance policies -- do you think they're in a position to overcome the trend and rise from their recent lows?
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
2. JPMorgan Chase
3. Time Warner Cable
4. PG & E
5. SunTrust Banks
6. Zimmer Holdings
8. Solera Holdings
9. Jack in the Box
10. Investors Real Estate Trust
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Alexander Crawford does not own any of the shares mentioned above. ISS ratings sourced from Yahoo! Finance.
The Motley Fool owns shares of JPMorgan Chase, Zimmer Holdings, and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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