2024-06-16 07:12:00 ET
Long-term investing requires optimism. This is why investing in turnaround opportunities is intrinsically dangerous. The danger to investors is the failure to properly assess the risks because they look at the opportunity through rose-colored glasses. Their optimism emphasizes the good possibilities instead of the bad ones and makes it harder to develop a balanced assessment.
Businesses sometimes perform poorly and need turnarounds. I'd say that's the case with PayPal (NASDAQ: PYPL) and Advance Auto Parts (NYSE: AAP) right now. Of course, every struggling business institutes a turnaround plan at one time. Just as many fail as succeed.
Let's look at the optimistic scenario for each of these struggling companies, but keep in mind what could go wrong as well. After a review, it might become clearer whether these two are on the brink of success.
For further details see:
These 2 Businesses Need Turnarounds. But Each Has a Potential Catalyst Coming That Could Send Shares Soaring.