Yahoo Finance What new CEOs have done for Target, Microsoft & McDonald's
I'm watching a couple of CEO turnaround trades today.
I've touched on the idea briefly before, but I want to flesh it out ahead of a particular earnings report tonight. The idea isn't complicated but it's made me money pretty consistently over the years.
Obviously simple and profitable is the holy grail of trading.
I'm not talking about penny stocks in need of a superstar exec to save the day. This trade works best with blue chips where Wall Street, for whatever reason, has lost confidence in management. In those situations a change at the top can be a very bullish catalyst, sometimes even without a new executive waiting in the wings.
Microsoft (MSFT) is a great recent example. Here's a five year chart. I don't have to tell you much about Microsoft beyond the fact that it used to be a monopoly and now it's known mostly for so-so software and clunky tablets. But check this out.
Steve Ballmer announced that he'd be retiring in August of 2013. The stock was up more than 20% before the new CEO was even named in February and had gone up by 40% by the end of 2014.
Another example is Target (TGT). 2014 was a horrendous year right up until August when Brian Cornell was put in place. You can see what happened next.
Tonight the Gap (GPS) reports. It's the first go-round for new CEO Art Peck. Keep an eye on the stock over the next few quarters to see if it can follow a similar path. The same goes for McDonald's (MCD) which gets a new CEO over the weekend. The stock is already celebrating.
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