There are scores of beaten-down stocks in the S&P 500, and surely some of those could be next year’s Best Buy (BBY). After all, about this time last year, everyone was writing the retailer’s obituary.
Cut to today, and BBY is the top performing stock in the S&P 500 for 2013, gaining nearly 270%.
But Best Buy’s turnaround notwithstanding, as Buffett says, most turnarounds don’t turn.
The cruel reality is that most beaten-down stocks aren’t going to be like Best Buy. Sagging sales, negative returns on equity (that shareholder-value-destroying sign of a low-quality stock), flawed execution or simply getting creamed by the competition are some of the reasons a stock can’t make it back.
So, by all means, scour the market for laggards that could turn into next year’s 10-baggers. More often than not, however, stocks are down for a good reason. Here are three beaten-down names that look to stay that way: