Turnaround Stock

A stock in a company that has been performing poorly but shows signs of recovery through new management, restructuring, or improving fundamentals. Turnaround investing requires patience and a strong stomach, since the line between a genuine recovery and a value trap can be thin. Legendary investor Peter Lynch highlighted turnarounds as one of his six stock categories, noting that successful ones can deliver multi-bagger returns when the market re-rates a once-troubled company.