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5 Top Turnaround Stocks

These former flops have seen great gains this year

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HPQSector: Technology
Year-to-Date Returns: 51% vs. 18% for the S&P 500

Hewlett-Packard (HPQ) has had obvious problems over the years, including a revolving door in the CEO’s office and a penchant for ill-advised acquisitions — from Palm to Autonomy.

However, HP has started its turnaround — or at least its reinvention — and has posted significant gains in 2013. The company has pivoted to enterprise instead of just overpriced ink for desktop printers and cheap plastic laptops, leveraging its depth into the tech space and relationships with top companies. Hewlett-Packard has also gotten serious about costs, laying off 27,000 employees as part of a restructuring announced in early 2012 that is still ongoing.

Naysayers will point out that HPQ stock has crashed since August earnings showed the turnaround is behind previous forecasts, and that its gutting of an R&D budget will cripple the company long-term.

But don’t count out a megacap tech stock like Hewlett-Packard, especially not one with dramatic outperformance in the last year and a cool $13 billion in cash sitting around.

The 2.7% dividend is nothing to sneeze at, either.

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