Investors have a love/hate relationship with turnaround stocks. When a company falls on hard times and can turn things around, investors who bought while things are dark can make considerable returns. But if the company fails to turn around, further losses mount.
A company that’s looking to turn around needs to be honest about their prospects, first and foremost. It’s easy to say things will turn around, whether they will or not.
Currently, chipmaker Intel (INTC) has an uphill battle, with the new CEO acknowledging that it won’t be easy. Intel has gone from being the industry leader in PC chips a generation ago to falling behind in the AI rush.
But, the company is working on a turnaround plan. And with shares up 9% year-to-date, they’re faring better than the high-flying chip stocks that are still reporting strong numbers.
Intel is currently unprofitable, and revenues were down by 7% in 2024. But with retooling to meet AI chip demand, Intel could continue to inch higher in unsteady markets.
Action to take: Momentum and turnaround investors may like shares here, as Intel could continue to see its share price rise as its new plan plays out, especially if it shifts back to profitability.
For traders, the June $25 calls, last trading for about $1.20, could see mid-double-digit returns.
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 company mentioned in this article.