A '''turnaround stock''' is a company's stock whose underlying fundamentals such as sales, revenue, cash flow, etc. have declined for a period of time but investors believe the company still has the potential to "turn around" and perform well in the future.<ref name=":0">{{Cite web |title=Turnaround: Definition in Business and Finance, Examples |url=https://www.investopedia.com/terms/t/turnaround.asp}}</ref><ref name="Bylund">{{Cite web |last=Bylund |first=Anders |title=What Is a Turnaround? |url=https://www.fool.com/terms/t/turnaround/ |access-date=2025-09-11 |website=The Motley Fool |language=en}}</ref>
== Criteria == Different investors have given various definitions of a turn around stock. Peter Lynch famously classifies turnarounds as one of his main six stock categories. Lynch defines turnarounds as stock that have been battered and depressed for a period of time yet have the potential to grow significantly and very quickly.<ref>{{Cite book |last=Lynch |first=Peter |title=One Up on Wall Street |date=1989 |isbn=0743200403 |pages=128}}</ref> He views these stocks as high-risk, high-reward.
These stocks typically have low P/Es or P/Bs making them potentially undervalued.{{cn|date=November 2025}} Many turnaround companies are in serious debt and on the brink of bankruptcy.<ref name="Bylund"/> Catalysts for recovery often include new management, debt restructuring, and improving macroeconomic factors among others.<ref name=":0" />
==See also== *Value stock *Growth stock *Peter Lynch
==External links== *[https://web.archive.org/web/20060318225224/http://www.forbes.com/newsletter/2005/10/12/zhone-primedia-amex-cz_gp_1012soapbox_inl.html Turnaround Stocks Of The Forbes 400] *[http://www.thestreet.com/p/rmoney/theturnaroundartist_up/10039205.html A Late-Summer Look at the Turnaround Stocks]
== References == {{Reflist}}
Category:Valuation (finance) Category:Stock market Category:Investment
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