The Turnaround Index (IST): looking for the inflection point
The IST (Turnaround Index) is STKtracker’s most speculative grade. It looks for companies that may be at an inflection point: trading cheap, showing some sign of recent improvement and, sometimes, with their own executives buying shares. It is an opportunity index, but also a higher-risk one.
What goes into the IST
The IST combines a depressed valuation with early signs of recovery and short-term solvency. These are its ingredients, in order of importance.
- EV/EBITDA — the highest-importance factor: whether the company trades cheap relative to its operating profit.
- Price/sales, quarterly EPS growth, current ratio and insider signal — high importance: valuation, recent improvement, short-term solvency and management confidence.
- Quick ratio and 3-month momentum — medium importance: they refine liquidity and the recent price impulse.
How to interpret the grade
A high IST flags a recovery candidate: cheap, with some sign of improvement and insider backing. But beware: many cheap companies are cheap for good reasons (a value trap). The IST alone does not tell a bargain from a trap; it is a starting point for research, not a recommendation. By its nature, it is the index that demands the most complementary analysis.
The IST does not reveal exact weights or formulas: it is a lens to detect possible inflection points, with a higher risk profile than the other indices.
How STKtracker uses it
The IST helps you spot possible turnarounds before the market, but use it with caution: always cross-check the grade against the value-trap guide and the Health (ISF) and Quality (ICE) indices to avoid value traps.
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Educational and informational content. It does not constitute financial advice or a recommendation to buy or sell. Investment decisions are each user’s own responsibility.