Some Turnaround Stories

Here are some stocks I think are poised for a sharp turnaround in the second half of 2018.

$VSI   Vitamin Shoppe

While falling to record lows late in 2017 two investment firms began amassing a large stake in Vitamin Shoppe.  Shah Capital and Vintage Capital Management now own some 35% of $VSI's outstanding shares. 

The name  Vintage Capital Management should ring a bell, they recently bought out $RCII for a near 50% premium to what the stock was trading at earlier this month.  The price tag for $RCII was  ~$1.4 BILLION.   In contrast $VSI sports just a $173 Million market cap.  Also $VSI is seeing new positions opened up by other firms with Tamarak and Millennium recently disclosing new stakes in the company.

While the slide from the $50+ price level down to the 2017 lows had a lot to do with funds running for the exits, the recent price stabilization and reversal higher has been from new investors.  I'd imagine those getting into $VSI the last few months think the worst is over for the company.  I agree.

Despite that, there is still a strong percentage of the float in the hands of short sellers, who still think the stock has further to slide.  Earnings continue to disappoint, revenue is falling, but at a much slower rate.  The company still sports some $50 a share in annual revenue, has modest debt, which they recently began addressing through a large pre-payment, and is now  starting to show growth outside of their stores  with a 20% increase in digital commerce.

My first thought, seeing Vintage Capital taking a large stake in $VSI, was that we are going to see another $RCII type buyout.  Anything is possible.  Clearly $VSI shares are getting accumulated, and I don't mind coming along for the ride.  I entered some short term calls on Friday and some longer dated ones.  I think the stock could see $10-$12 by the fall buyout or not.   If earnings surprise, or we get a buyout offer... perhaps even higher.  That's my thoughts behind going long via calls.  It could head back to $5 next week and stay there until 2020.  But I not so sure that will be the case.  I like the risk/reward here.

$GME - Gamestop

I'm not going to get into a detailed discussion today.   I still have July Calls, and recently entered some November calls. The big short position:

has only grown over the years.  They've been right in 2018,  the stock has finally given way, recently hitting a 10 year support level.  That support level held, and the stock looks poised for higher prices.

Gaming is growing is leaps and bounds.  I know digital sales are growing, you don't need a disk or cartridge for most of the games these days.  But clearly Gamestop has stuck around for a reason.  The company does some $90 a share in sales.  They are looking at other ways to bring customers into the store.

There has been recent buyout chatter that has helped lift the stock.

Buyout or not I think it can go back over $20 into the late summer early fall.  As such, I am long calls for that possible move.

A few other stocks I like the next few weeks:


$FSLR looks to have found its footing after a nasty spill.  There's a decent set-up for upside with a move to $60 a likely scenario.



It's been an incredible decline from the January highs.  I do think we are starting to see a momentum shift finally, with last weeks action the first positive sign in quite a while  $OLED is not going away, and I do think this stock trades back over $100 in the short to medium term.   $120+ is possible later this year in my opinion.  For now a move back over resistance will be a nice start.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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