What an epic story of redemption… fitting for a Hollywood movie script. They’d probably cast Kevin Costner in the leading role of grizzled veteran ballplayer Chris Sale.

What Sale accomplished last season is borderline miraculous. The 35-year-old pitcher had been a perennial All-Star earlier in his career and was at the top of the game from 2012 through 2018. But like many flamethrowers, his path to stardom was derailed by injury. Shoulder inflammation. Left elbow tear. Broken rib cage. You name it.

He struggled through several injury-riddled seasons, spending far more time off the field than on. Despite all the physical setbacks, the Atlanta Braves took a chance, signing Sale to a two-year $38 million contract. Given his history of mechanical breakdowns, some thought the Atlanta front office was crazy.

Privately, some felt it was time for Sale to hang up the cleats and retire.

But the former ace proved the doubters wrong, putting together the best year of his stellar career. He finished first in the National League in wins (18), earned run average (2.38) and strikeouts (225), capturing the coveted Triple Crown. And after six Cy Young runner-up finishes, Sale was finally named the league’s best pitcher in a near-unanimous decision.

Talk about a no-brainer choice for the “Comeback Player of the Year” award.

Who doesn’t love a good turnaround story… whether it’s on the field, the big screen, or down in the business trenches.

Investors must often place faith in companies that aren’t exactly playing their best. Maybe they’re in a slump. Maybe they need the financial equivalent of Tommy John surgery to mend something that is broken. It happens.

That doesn’t mean these talented companies can’t make a full recovery and return to their ‘A’ game. Until then, the fair-weather market fans rain down boos. I don’t mind. That’s how we get the opportunity to buy $60 stocks for $30 – and lock in 2.5% dividend yields at 5.0%.

MVP candidates rarely trade at such discounts. If anything, they normally command a rich premium. But if you’re willing to overlook a few blemishes and buy what’s out of favor, it’s possible to pick up quality assets for pennies on the dollar. So-called “contrarian” fund managers make a living doing just that — going against the crowd.

Now, some lost companies never quite find their way back. So you’ll want to check the width and depth of the firm’s economic moat to make sure its competitive advantages aren’t being eroded. Next, determine that any threats facing the business (or the broader industry) are temporary and can be overcome in time.

With those conditions met, I felt confident buying Archrock (NSDQ: AROC) a few years ago. The natural gas compression specialist had just posted an alarming 22% drop in earnings and wasn’t even generating enough cash to cover its dividends. After back-to-back-to-back earnings disappointments, investors were fleeing the stock in droves.

Here’s what I had to say at the time.

The dividend coverage ratio has weakened to 88% from 98% the prior quarter and 204% a year ago. Obviously, that’s not a trend we like to see. But remember, this is a turnaround candidate. There are several reasons why I believe Archrock is primed for a breakout year.

I proceeded to check them off. Improved fleet utilization rates. An uptick in new orders. Rising natural gas consumption. Archrock competes in a cyclical industry where booking/bidding levels vary with the capital spending of upstream oil and gas producers. I felt the next upcycle was dawning and bought 250 shares.

The rest is history. This unloved stock has since more than tripled in price, rebounding from less than $7 to $24.

I see similar potential in a beaten-down maker of outdoor toys. The stock, which sold for $110 just two years ago, has since shed half its market capitalization, stumbling to around $55. That means the same $5,500 outlay that would have once bought 50 shares will now get you 100.

That wouldn’t matter if the company’s fair value (based on assets and operating cash flows) had fallen commensurately. But I don’t think it has. The stock hasn’t been this cheap since the depths of the Covid crash, but the underlying business is much healthier than it was back then.

In fact, most of its nagging injuries are already healing.

I’m talking about Polaris (NYSE: PII), one of the nation’s largest manufacturers of motorized off-road vehicles.

Great for exploring rugged mountain trails or towing heavy payloads across farms and hunting camps, approximately 800,000 four-wheelers and side-by-sides are sold annually in North America. Polaris is the dominant market share leader, offering more than 100 different models across various configurations and price points.

Polaris is also a leading supplier of snowmobiles and pontoon boats. These products are sold through a network of over more than 2,500 trusted global dealers located in 100+ countries worldwide. They generate nearly $9 billion in annual sales.

With a gross margin north of 20%, the company pockets about $1.8 billion in gross profits. Operating expenses eat up $1.3 billion, leaving a healthy net profit of $500 million – or $8.71 per share.

Management returns $2.64 via dividends, for a comfortable payout ratio of 30% ($2.64/$8.71). At least, that’s where these figures stood at the beginning of 2024.

The past year has been, in a word, ugly.

That’s true not just for Polaris specifically, but the entire powersports industry. After enjoying a prolonged post-pandemic boom, consumers have reined in discretionary spending, particularly on big-ticket items. Manufacturers are struggling to ship more units, because dealers are already bloated with unsold inventory.

But there are reasons for optimism.

By reducing shipments, Polaris has reached an interim target of reducing dealer inventory levels by 15% to 20%. Eventually, these retail outlets will need to restock. Meanwhile, efficiency and cost savings initiatives laid out last year didn’t just meet goals, but exceeded them by $100 million annually. Macro headwinds (namely high interest rates) are subsiding as well.

The demand picture hasn’t changed too much just yet. Management expects revenues to slip a point or two in 2025. But that’s much better than last year’s 20% falloff. Stabilization is the first step to improvement. Keep in mind, Polaris has 29 consecutive annual dividend hikes under its belt – and thus a proven ability to navigate through downcycles.

I first laid out this bullish case back in February, and for a time the stock continued to sink, bottoming near $30 on April 9. But with upbeat second quarter sales, positive news regarding tariff impacts, and enthusiastic feedback over the release of its 2026 vehicle lineup, PII has since rallied more than 80%.

I don’t expect 2025 to be a banner year, but it could mark an inflection point in this downcycle and the beginning of a new upswing. It won’t take much to keep winning back investors, with the stock trading at just over 6 times 2023 earnings.

Beyond that, the bigger picture is highly constructive. Millennials now control an estimated $15 trillion in wealth – and have a thirst for outdoor recreation.