Turnaround opportunities can be tough for investors, as many turnaround plays often fail to, well, turn around.
However, when a company does manage to pull it off, it can beat the market for years as it regains lost market share, and potentially even grows into new markets and new heights. That can be incredibly rewarding for investors. While those who got in at the start may fare best, those who wait to see a successful turnaround can earn great returns too.
The latter example is shaping up with Ford Motors (F). The automaker was left in the dust by foreign competitors and later by the rise of electric vehicle companies. However, the firm is starting to convert its popular fleet of cars into electric models as well.
The change at the company has taken years to play out, but chances are sales will continue to boom for the carmaker as it transforms its product line into offerings the market is willing to pay a higher multiple for.
Action to take: Investors may like shares here, even after an 82 percent rally in the past year. That’s because the stock still trades at less than 10 times forward earnings. Plus, the company recently reinstated a dividend of just under 2 percent at today’s prices.
For traders, the June $25 calls are attractive. Priced at about $1.00, they’re an inexpensive contract that could soar with a jump higher in shares in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.