Market leadership in any given year often leaves a long list of laggards behind. In 2025, several well-known stocks have fallen more than 20% year to date as investors punished near-term uncertainty, margin pressure, or slowing demand. But history shows that periods of underperformance can create opportunity, especially when a company’s long-term fundamentals remain intact, and the headwinds appear cyclical rather than structural.

Turnaround investing is not about catching falling knives. It is about identifying companies where expectations have fallen too far relative to future earnings power. In many cases, stocks sell off not because the business model is broken, but because timing, sentiment, or macro conditions temporarily obscure longer-term value. As markets begin to look ahead to 2026, attention is gradually shifting from what went wrong this year to what could improve next.

We have identified three stocks, Lennar Corporation (LEN Quick QuoteLEN - Free Report) , Marvell Technology, Inc. (MRVL Quick QuoteMRVL - Free Report) and Snap Inc. (SNAP Quick QuoteSNAP - Free Report) , each down sharply in 2025. Whether it is housing, semiconductors, or digital advertising, these businesses have identifiable catalysts that could support a rebound as conditions normalize. For investors willing to look past recent weakness, 2026 could mark a turning point.

3 Stocks for Your Portfolio in 2026

Shares of Lennar have declined 20.6% year to date. Lennar’s focus on maintaining volume by using price incentives and mortgage buydowns has weighed heavily on profitability.

However, Lennar enters this slowdown from a position of strength. The company has one of the most efficient operating models among large U.S. homebuilders, with disciplined land acquisition and strong balance sheet flexibility. Lennar’s technology-driven transformation is central to its long-term investment case. The company is evolving from a traditional homebuilder into a tech-enabled manufacturing platform, aiming to unlock scalable efficiencies, reduce customer acquisition costs, and modernize its entire operating model.

The Zacks Rank #2 (Buy) company is focused on various playbook strategies to reduce the direct construction cost, deliver gross margin improvement and maintain starts for the upcoming quarters. Lennar prioritizes collaboration with trade partners to streamline the cost structure according to the prevailing sales price environment, aiming to speed up construction and reduce supply chain disruptions.

The Zacks Consensus Estimate projects fiscal 2027 sales to rise by 7.5%, while earnings are expected to grow 21.3% year over year. In the past 30 days, the Zacks Consensus Estimate for fiscal 2027 earnings has increased to $11.13 from $10.02.

Image Source: Zacks Investment Research

Marvell Technology has been one of the more disappointing semiconductor stocks in 2025, despite its strong exposure to artificial intelligence and cloud infrastructure. Shares of the company have declined 23.8% year to date. Delays in customer spending, uneven data center demand, and cautious enterprise budgets have weighed on near-term revenue visibility, dragging the stock down sharply.

Yet the long-term story remains compelling. Marvell plays a critical role in custom silicon, networking, and data center connectivity, areas that are essential to large-scale AI deployments. While AI investment cycles can be uneven, they rarely reverse entirely. Instead, spending tends to pause before accelerating again as new workloads scale.

Looking to 2026, this Zacks Rank #1 (Strong Buy) company stands to benefit as cloud customers resume infrastructure upgrades and next-generation AI architectures move from planning to deployment.

The Zacks Consensus Estimate projects fiscal 2027 sales to rise by 22.4%, while earnings are expected to grow 25.7% year over year. In the past 30 days, the Zacks Consensus Estimate for fiscal 2027 earnings has increased to $3.57 from $3.34. You can see the complete list of today's Zacks #1 Rank stocks here.

Shares of Snap have declined 29.2% year to date. Investors are concerned about its heavy dependence on advertising revenue. Ads still drive most of the business, leaving Snap highly exposed to swings in ad demand and pricing. That risk became more visible as advertising growth slowed sharply, even while total revenues posted modest gains.

However, the Zacks Rank #2 company’s growing use of artificial intelligence is changing how younger users discover information and engage with content, creating monetization opportunities beyond traditional advertising. By embedding AI into everyday interactions, Snap is making its platform more central to how teens ask questions, explore ideas, and communicate.

The partnership with Perplexity reflects Snap’s emergence as a key distribution channel for conversational AI as information consumption shifts away from traditional search. Under the deal, Perplexity will pay Snap $400 million over one year to integrate its AI-powered answer engine into Snapchat’s chat interface starting in early 2026, with revenue contributions expected to begin that year.

As digital advertising cycles recover, Snap could see improving revenue growth without needing explosive user expansion. If management continues to demonstrate cost discipline and incremental margin improvement, sentiment could shift quickly. For 2026, Snap represents a classic high-risk, high-reward turnaround candidate.

The Zacks Consensus Estimate projects 2026 sales to rise by 13.4%, while earnings are expected to grow 52.3% year over year. In the past 60 days, the Zacks Consensus Estimate for 2026 earnings has increased to 49 cents from 38 cents.