Investors and traders alike are often interested in turnaround plays. A struggling company with a lagging stock price might announce major changes in the hopes of turning things around.
While many turnaround plays fail to turn around, a company that is able to do so will give investors a chance for market-beating returns once it’s clear such a move is possible. It’s more likely to be successful with a company that has a strong market position that is starting to show signs of life once again.
That appears to be the case with Boeing (BA). The airline manufacturer is on track to double its deliveries in 2021 relative to 2020. With a robust return in travel and shipping demand, it’s likely that the company will continue to deliver over the course of several years, rather than this being a one-off trend.
The turnaround isn’t complete yet, but revenue is now trending up, with an 8 percent rise over the past year. Boeing shares are still down nearly 14 percent in the past year, a 40 percent underperformance relative to the S&P 500.
Action to take: Investors might consider shares for a further turnaround in the space. The stock doesn’t currently pay a dividend, but if the company continues to deliver, that could be restored in time.
For traders, shares are still in a decline. However, the rate of decline has slowed. Traders should look for a trend reversal in shares, then consider a long-dated call option such as the January 2023 $250 calls. Last going for about $14.50, the calls could deliver high-double-digit returns in the coming months on a turnaround.
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.