Investors can sometimes see big returns from companies that restructure. That’s been the case with Apple (AAPL), which nearly went bankrupt in the late 1990s before it was able to refocus on key products. Apple would go on to create the iPod and iPhone after its bailout.
While not every restructuring will turn a company into the world’s largest, a successful turnaround should mean big profits as the market starts rewarding shareholders.
That could be the case with video game retailer GameStop (GME). The company’s latest earnings report wasn’t impressive, with a 20% decline in sales. But GameStop did turn profitable.
And they have over $4.5 billion in cash against no debt, a strong balance sheet that can keep the company going. With the high yield on cash right now, GameStop’s profitability can likely increase further.
With the holiday season underway, the next quarter’s earnings may lead to further gains on top of the 61% return GameStop has seen over the last 12 months.
Action to take: Shares are a speculation here, but likely one with further upside in the months ahead. Investors and traders alike should look to take some quick profits, and sell on any big spike higher in shares.
For traders, the April 2025 $40 calls, last trading for about $4.95, could see high double-digit returns from a further trend higher. Sell on any massive jump higher in shares.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.