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.
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.
He views these stocks as high-risk, high-reward.
These stocks typically have low P/Es or P/Bs making them potentially undervalued.
See also
External links
