What is a Turnaround Stock?

Is investing in it risky?


When a company posts poor financial performance sequentially (QoQ or YoY), the stock price usually get hammered and is out of flavor by the market participants.

However if the fundamentals gradually improves the company starts to turn around and hence the stock prices. This is called a turnaround stock.

Classic example in Indian markets in current scenario are infrastructure stocks. Infra stocks were out of flavor, loss making owing to Govt policy issues. However with the new Govt, suddenly the prospects seems bright and market participants expect a turn around. This has translated to higher stock price.

L&T from a low of 685 has bounced to 1600!!