2 hot turnaround stocks that could make you very rich

Shares in Pantheon Resources(LSE: PANR) haven't exactly been sparkling of late, dropping 47% over the past 12 months, to 53p.

The oil and gas explorer, which operates in Tyler and Polk Counties in East Texas, has surely been suffering from the side effects of stubbornly low oil prices and the general feeling of gloom afflicting the whole sector. And, of course, there's the fact that Pantheon isn't actually making any profit.

But that could be all set to change, as analysts have profitability marked in for for the year to June 2018. And Pantheon looks to have the cash needed to break through to such heady days after a placing in July this year was apparently heavily oversubscribed.

Chief executive Jay Cheatham said that the new capital will enable the firm to accelerate its drilling programme, and told us that cashflow from Polk County was expected later this year.

Set to flow

The latest of a series of operational updates, on Tuesday, said the company has started drilling a sidetrack of its VOBM#4 well to target the Wilcox formation. This was encountered while drilling the main well, and it's likely to take 30 days to complete the new exploration (barring problems).

With the assembly of the Kinder Morgan gas processing facility complete, saleable gas from Polk County is now expected to be flowing into the pipeline by November.

It's not all sweetness, mind, as difficulties with hard rocks at the VOBM#2H well are expected to impact the ability to maximise flow rates. But Mr Cheatham says he's "very excited about the potential of the Wilcox reservoir."

Risky, but I'm optimistic.

Successful restructuring

Restructuring has been the order of the day for Mitie Group(LSE: MTO), after a bad patch that saw earnings crumble. For the year to March 2017, the facilities management and services outsourcer reported an operating loss of £42.9m. That was hit by a number of one-offs, though after excluding those, we still saw a £6.3m loss.

But even then, Mitie's order book was standing solid at £6.5bn and its sales pipeline had risen 10% to £8.7bn.

Analysts are now predicting a return to solid profit this year, followed by a 21% hike in earnings per share next. In addition, the dividend, which was slashed in 2017, is slated for a return to progressive growth in the year to March 2019.

Recent feedback from the company is supporting that optimism, with a pre-close update in September saying that "we are making steady progress in the transformation of Mitie" and telling us that "top line growth in the first six months has been encouraging."

Cost-cutting

A serious effort is being made to control costs too, with a strategy of outsourcing some of its own needs and consolidating some of its infrastructure expected to result in savings of around £40m per year by 2020.

We're looking at a forward P/E of 14 for the year to March 2018, dropping to under 12 by 2019 when the dividend yield is expected to be back to 2.1%.

That's not screaming bargain territory, and a further fall in the shares over the past month does suggest there's still some weak sentiment out there. But I see a reliable long-term investment here, and the shares are a cautious buy for me at the moment -- especially as those buying now could be locking in big effective future dividend yields.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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