Buy Ahead of Profitability for Better Returns

When a company is out of favor with the market, it has to prove itself. That can mean successfully undertaking a turnaround, or selling off part of the company. Most of the time, it means streamlining the business and moving towards profitability.

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  • For companies that aren’t profitable right now, those that can embrace new trends and grow the business over time are in a great position to surprise investors with positive results later that aren’t expected today.

    One such potential play today is Marvell Technology (MRVL). The semiconductor manufacturer has struggled with profitability over the past year, but it’s moving to add a suite of semiconductors for artificial intelligence (AI) needs.

    That could help bring the company to new profitable markets. And surprise investors to the upside in the years to come.

    Action to take: Shares are worth buying at current prices or on any drop under $60. Marvell pays a modest 0.4 percent dividend. The stock is still down one third from its all-time high in 2021, and a push into the AI space could lead to new highs.

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  • For traders, the January 2024 $75 calls, last going for about $3.80, could see a further gain from here as shares trend higher in the second half of the year.


    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.