2 out-of-favour FTSE 250 stocks set for a potential turnaround in 2026

There are many household-name shares languishing within the FTSE 250 as 2026 approaches. And whereas there are some I’m not satisfied about — together with Aston Martin and Ocado — there are others I reckon have sturdy turnaround potential.

Listed below are two of them.

Down 43%

Let’s begin with WH Smith (LSE:SMWH), which has plummeted 43% yr so far.

The harm got here again in August when the corporate introduced its North American division had been overstating earnings. It led to the departure of the chief govt and annual outcomes being delayed (twice) whereas an unbiased reviewer will get to the underside of issues.

The outcomes protecting the yr to 31 August (FY25) are lastly due tomorrow (19 December). However given the plain dangers right here, why hassle with WH Smith?

Properly, firstly, this wasn’t fabricated earnings. The retailer recorded it too early from suppliers. It now expects to guide an annual headline buying and selling revenue of £5m-£15m in its North American division, as an alternative of £55m as initially guided.

So, this seems to be a timing challenge (although clearly a critical one, with prior yr changes additionally anticipated). Provider earnings in its UK and Remainder of World divisions has been “appropriately recognised“.

Subsequently, the issue is confined to North America, not group-wide. And the corporate nonetheless expects group pre-tax revenue to be within the vary of £100m-£110m for FY25.

In the meantime, the long-term alternative nonetheless seems intact, in my view. WH Smith is now a pureplay journey retailer, with over 1,200 shops worldwide, together with in main worldwide airports the place competitors is structurally restricted.

Between 2024 and 2050, passenger numbers are forecast to extend 2.5 occasions as worldwide markets develop and journey booms. WH Smith intends to develop its share of the large North American journey retail market to round 20% by 2028, up from 14% at the moment.

After all, it is going to take time to totally restore traders’ belief. However affected person traders would possibly wish to contemplate the inventory whereas it’s at a 12-year low.

The ahead price-to-earnings (P/E) ratio is now lower than 10.

Down 38%

The second FTSE 250 inventory I feel may bounce again in 2026 is Greggs (LSE:GRG). It has plunged 38% this yr after weaker-than-expected gross sales progress and wider macroeconomic pressures, that are admittedly nonetheless dangers within the background.

But with November’s inflation price falling to the bottom degree in eight months, and additional rate of interest cuts seemingly in 2026, shopper confidence would possibly begin creeping again.

2025 may also be Greggs’ peak yr for capital expenditures, because it invests in new Kettering and Derby amenities. The latter, set to open in early 2026, will likely be a state-of-the-art frozen manufacturing and logistics web site. It’ll characteristic totally automated robotic order selecting and distribution, which ought to increase long-term working margins.

These places will add the manufacturing and logistics capability to help as much as 3,500 retailers (up from 2,675 in September).

Within the meantime, the agency can be trailing ‘Bitesize Greggs’, that are smaller retailer codecs for high-footfall places (like busy prepare stations and airport terminals) that don’t have sufficient room for the standard store.

After the share worth collapse, Greggs trades on a forward-looking P/E ratio of roughly 13. Add in a 4% dividend yield, and this FTSE 250 inventory appears like a stable worth proposition value taking significantly.