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7 Turnaround Stocks and How They're Doing (CMG, TWTR, MCD)

By U.S. News & World Report

When something needs to change.

Everybody loves the narrative of a come-from-behind victory. On Wall Street, those stories are often told over the period of several years. A well-executed turnaround plan typically means big bucks for investors, while a poorly executed plan can lead the company right down the path to bankruptcy. From Chipotle Mexican Grill (ticker: CMG) and Twitter (TWTR) to McDonald’s Corp. (MCD) and Sears Holdings Corp. (SHLD), here are seven notable turnaround stocks — and a brief look at how those turnarounds are currently faring.

Chipotle Mexican Grill (CMG)

In mid-October, 2015, Chipotle was trading above $750 per share. By January, CMG had bottomed out around the $400 level as skepticism regarding the company’s ability to recover from a series of outbreaks reached a fever pitch. Chipotle adopted new food safety measures, introduced a loyalty program and cranked up its marketing in response to the issues. Aside from a norovirus scare at a Boston store in March, there haven’t been any issues with Chipotle’s food safety since December, but shares have been recovering slowly. It may take years for Chipotle’s same-store sales to pick back up; they plunged 29.7 percent in the first quarter and 23.6 percent in the second.

JC Penney Co. (JCP)

JCPenney shareholders know that recoveries don’t happen overnight. In fact, JCPenney has been in decline for much of the last 10 years, and in all-out turnaround mode since 2011, when activist investor Bill Ackman stepped in and hired former Apple (AAPL) exec Ron Johnson as CEO to come in and turn things around. Instead, Johnson boldly rejected the practice of discounting altogether, alienating longtime customers and sending sales plummeting. In 2013, Johnson was fired and JCPenney did away with its dividend, and only now is the havoc Johnson unleashed on the company being reversed. JCP is expected to report its first full-year profit since 2011 in fiscal 2016.

Sears Holdings Corp. (SHLD)

It’s tough to call Sears a turnaround play because all its efforts to reverse its declines have been flamboyant failures. Revenue has fallen every year since 2007; when SHLD reports another revenue decline for 2016 it will be the 10th consecutive year of slumping sales. Sears CEO Eddie Lampert, who took over as CEO in 2013, has been selling off assets and closing stores by the hundreds to slow a steady decline in cash flows, but it looks now as if SHLD may go bankrupt before a turnaround can take place. Fitch Ratings recently said Sears posed a “significant default risk” within the next one to two years.

International Business Machines Corp. (IBM)

IBM, like so many tech companies of yore, is pivoting firmly into cloud computing, where the growth and enviable margins are. That’s good, because the second quarter marked the 17th straight period of declining revenues, so shareholders are rightfully anxious for a change of pace. While overall revenue fell 3 percent in the second quarter, revenue from strategic imperatives — the anchor of the turnaround — rose 12 percent and cloud revenue jumped 30 percent. Analytics, security, and Watson Health should all also be exciting new drivers for Big Blue going forward, and may be able to help end the company’s streak of ugly quarters sometime in 2017.

McDonald’s Corp. (MCD)

When McDonald’s CEO Steve Easterbrook took over for Don Thompson in 2015, same-store sales were on the decline and McDonald’s found itself front and center in the “breakfast wars” that fast-food companies were waging against one another. He quickly laid out a turnaround plan that focused on boosting efficiency, refranchising 9 percent of all stores and generally doing “fewer things better.” While company-wide revenue hasn’t started growing again just yet, same-store sales are increasing, and the introduction of all-day breakfast has been a wildly popular initiative. The focus on simplicity and service appears to be paying off, making McDonald’s one turnaround story that’s working out well for shareholders.

Twitter (TWTR)

Twitter has essentially been in turnaround mode since mid-2015, when CEO Dick Costolo, sick of second-guessing from Wall Street, resigned. Co-founder Jack Dorsey was installed as interim CEO, then appointed full-time CEO that October, but his touch hasn’t been able to fix Twitter’s core problems: user growth and online abuse. Dorsey has brought streaming video — and notably Thursday NFL games — to the platform, which may be the reason companies like Walt Disney Co. (DIS), Salesforce.com (CRM), and Alphabet (GOOG, GOOGL) are reportedly interested in buying the company.

Sprint Corp. (S)

When Sprint CEO Marcelo Claure took the reins in August 2014, he was tasked with making the underperforming Sprint more competitive with Verizon Communications (VZ), AT&T (T), and a newly problematic T-Mobile US (TMUS). Sprint’s attempt to buy T-Mobile had fallen apart, meaning Claure had to figure out how to grow organically. Using heavy price promotions and marketing, he began a turnaround, and in fiscal 2015 Sprint posted positive operating income for the first time in nine years. Churn, or the percentage of customers that drop service, was the lowest in company history. Now consistently gaining subscribers, Sprint shares are up more than 80 percent for the year.

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7 Turnaround Stocks and How They’re Doing (CMG, TWTR, MCD) originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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