Value investors who gamble on turnaround companies take significant risks. Companies that fail to fix their falling business prospects will keep underperforming.
Those who adapt to the economic times and competitive landscape will rebound.
Intel (INTC) shattered its investor’s level of confidence when it posted a weak outlook, suspended its dividend, and cut staff. On August 22, 2024, Lip-Bu Tan, the former CEO of Cadence Design (CDNS), stepped down from the board. This may suggest that Intel’s prospects will stay weak for longer.
Intel is not likely a turnaround play.
In the automotive sector, Advance Auto Parts (AAP) lost 17.5% yesterday. Before that, the stock traded in a downtrend since March 20, 2024. At $88.56, that was the peak for AAP stock. The firm lowered its FY 2024 guidance for the year. It expects net sales of up to $11.25 billion and an EPS of $2.00 to $2.50. Analysts expected an EPS of $3.52.
The firm sold Worldpac to Carlyle Group (CG) for $1.5 billion.
AAP stock is still too expensive. Avoid the stock.
Stellantis (STLA) started its turnaround trading when shares bottomed at $15.12.
The CEO is scheduled to visit Detroit. CEO Tavares must announce a profit turnaround plan. If the firm does not rejuvenate sales, this, too, is a stock that is not in a turnaround.
