Turnaround Stories and Shorting Stocks

NVDA DG In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Matt Frankel, and Lou Whiteman discuss: Investing in turnaround stocks: What to look for? Citron Research’s Andrew Left found guilty of securities fraud. The “ickiness” of the short-seller business model. Listener question: Are crowdfunded real estate funds worth it? What to look for? To catch full episodes of all The Motley Fool s free podcasts, check out our podcast center. When you re ready to invest, check out this top 10 list of stocks to buy. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Before you buy stock in Dollar General, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dollar General wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,191!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,258,838!* Now, it’s worth noting Stock Advisor’s total average return is 941% — a market-crushing outperformance compared to 211% for the S&P 500. Don t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. *Stock Advisor returns as of June 6, 2026. This podcast was recorded on June 2, 2026. Tyler Crowe: We re talking short sellers and turnarounds today on Motley Fool Hidden Gems Investing. Welcome to Motley Fool Hidden Gems Investing. I m your host, Tyler Crowe, and today I m joined by longtime Fool contributors, Lou Whiteman and Matt Frankel. We re going to be getting into short sellers, specifically short-selling research firms, after the court decision that came down on Citron Research earlier yesterday. We re also going to look at investor questions related to real estate on the private side, not necessarily reads that we normally talk about on a publicly traded entity show. But first, we re going to start with Dollar General. I wanted to bring this one up specifically because it s been a turnaround story for several years. It s not the most headline-grabbing company. But during the 2010s, Dollar General was one of the best-performing stocks. It handily beat the S&P 500. Companies that we think of now like Mag 7 companies like Microsoft and Alphabet, Dollar General was beating it. That came to a crashing halt right around 2022 as trouble started to pile up for various reasons, and the company s been trying to get its act together for a while now. This morning, it just reported earnings, and the numbers said they beat expectations and raised guidance, and yet the stock is down about almost 3% as we re taping this. Matt, was this a good result, or was it just beating bad expectations for what is now a downtrodden stock? Matt Frankel: Well, Dollar General, you re right. They beat expectations on earnings. On revenue, they missed expectations a little bit. It wasn t all good. Same-store sales, for example, grew 2% year over year. That s less than the rate of inflation, so on a real basis, they actually lost same-store sales. On the other hand, their margins look good. Gross margin rose 65 basis points, net income increased by 13%, and as you mentioned, earnings beat expectations. It missed slightly on the top line, beat on the bottom. I m not shocked that the stock is under pressure. The company is making good progress on its plan to renovate and improve its existing stores, which is a big cornerstone of their turnaround plan. They did 1,400 of them in the first quarter alone, they re aiming for a little over 4,200 for the entire year. They continue to open stores when they see opportunities. Almost 200 new stores were opened during the first quarter. They maintained their revenue guidance for the full year, but they raised their earnings guidance. I d say things are going OK. They re not going great, but they re going OK. Lou Whiteman: Maybe the market debate is in the word good in good progress. Because, yes, there s definitely making progress here. This is a promising start to what figures to be a long-term turnaround. They were beaten, rightfully so, I may add, and the market right now, I don t think they want to celebrate just one quarter of a turnaround. They have an ambitious plan. There s nothing in this quarter to suggest that there s anything wrong with the plan, but competition is intense here. In retail, there is no guaranteed winner. You are not entitled to continue to exist, so there is real downside risk. Turn around,

Turnaround Stories and Shorting Stocks

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