Investors are captivated by high fliers and momentum stocks, and with good reason. The gains put up by a company like Tesla (TSLA), which has soared 540% in the last 12 months, are always the envy of Wall Street.
But there’s also money to be made in stocks that were once on the top of their game but have suffered a flop — either thanks to external factors or mismanagement. If you can find one of these battered players right before it bounces back, you can make as much money as in the momentum darlings with nothing but blue skies ahead of them.
There are clearly risks here, as underperformers can frequently continue to circle the drain. The best minds on Wall Street can be faked out by these stocks, thinking they are back on solid ground when nothing has changed.
But if you are skeptical of frothy plays like Tesla and want to tap into big profits by looking in a different direction, consider these five top turnaround players: Hewlett-Packard (HPQ), Micron Technology (MU), Best Buy (BBY), eTrade (ETFC) and Netflix (NFLX).