Could any of these companies double in value as they turnaround their operations?
Shares in Tesco have fallen by 60% from their all-time high of 476p in 2007. Yet the firm still has a 28% share of the UK grocery sector. Upstart rivals Aldi and Lidl have just 5% each.
Although Tesco does have too much debt and is struggling to rebuild its profit margins, things do appear to be improving.
The firms recent interim results show that sale volumes rose by 1.4% during the first half of the year, suggesting the firm is reclaiming some of its lost market share.
Profits are expected to be 444m this year, rising to 743m in 2016/17. The shares may eventually double, but investors will need to be very patient.
Small cap Oxus Gold edged higher this morning after the firm reported that hedge fund RAB Special Situations, whose shares have fallen by 65% over the last three years, took an 8% stake in the firm last week.
Oxus shareholders are awaiting the outcome of an arbitration case relating to confiscated mining assets in Uzbekistan. Oxus believes it is entitled to as much as $400m in compensation for the lost assets.
However, the outcome of such cases is very hard to predict. The firm has no other assets or activities, so if the ruling goes against Oxus, the firms shares could become worthless.
Shares in oil and gas explorer have halved over the last year, despite Ophirs acquisition of Salamander Energy, which has provided much-needed cash flow for the group.
Ophirs key attraction are its large gas discoveries offshore Africa. But these are long-term projects requiring billions of dollars to develop. Progress is proving slow.
In the meantime, Ophir shares trade at just over half their book value of 160p per share. Ophir remains well funded and I believe patience will be rewarded here, but possible not for several years.
The reputation of scandal-hit Serco Group has been dragged through the mud over the last year. The shares have done little better, falling by a whopping 65% to less than 100p.
Although a 555m rights issue has helped to rescue the firms finances and relieve debt pressures, Serco is only expected to report profits of around 35m in 2015 and 2016. The group has recruited highly-regarded ex-Aggreko boss Rupert Soames to be its chief executive, but does not yet look like a compelling recovery buy to me.
Coal power generator Drax is working hard to convert its operations to use wood-based biomass fuels.
The regulatory costs of burning coal are rising, so this makes sense.
Unfortunately, the governments sudden decision in July to cut support for renewable power generators has thrown a spanner in the works.
Drax shares have now fallen by 52% over the last year. The firm is only expected to report a post-tax profit of 12m this year, compared to 33m in 2014. The future seems uncertain and a big dividend cut seems likely. I think its too soon to invest in a recovery at Drax.
Investing in downtrodden businesses such as Tesco and Drax can deliver big profits, but the risks can also be high.
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Roland Head owns shares of Tesco. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.