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We’ve all been in a situation that went “from bad to worse.“

• That blind date in college…
• The speech you weren’t prepared for…
• Or the job you thought would eventually get better…

You’ve probably experienced “bad to worse” with an investment as well. It’s common to have small problems lead to a much bigger loss if you hold a position for too long.

But that’s not what I want to talk about today… Instead, we’re going to talk about what happens when a stock goes from “WORSE” to simply “bad“.

It may sound weird, but sometimes the biggest gains can be made when a company starts to turn things around…

Sure, there may still be many challenges ahead. And objectively the stock may actually be “bad”.

But the simple fact that things are improving can drive a dramatic shift in a company’s stock price. And that shift can lead to some lucrative trading profits.

Today, we’re going to take a look at a real-time example of “worst to bad”. This challenged stock is a great rebound candidate as we head into the final trading weeks of 2025.

J.B. Hunt: Operating in a Tough Environment

The shipping and logistics industry can be extremely challenging.

• Shippers are sensitive to economic shifts which drive freight demand.
• High operational costs squeeze profit margins.
• Competition is intense an fragmented.
• A driver shortage makes it difficult to meet demand.
• Regulatory changes increase compliance burdens and operating costs.

So it’s no wonder trucking giant J.B. Hunt Transport Services Inc. (JBHT) have been trending lower this year… even while the broad stock market has been hitting new all-time highs. Economic uncertainty, tariff volatility and shifting supply chain dynamics have weighed on the stock.

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With the stock dropping from $200 to $130 during a strong bull market, investors could easily classify this stock as “terrible”.

But something interesting happened last week…

From “Terrible”… to Just “Bad”

The company reported earnings and management noted some key changes…

The freight environment is still challenging — analysts have even dubbed it a “freight recession.” And revenue for JBHT was FLAT over the previous quarter.

Most investors would consider this “bad”.

But the company was able to grow profits thanks to cost cutting.

Operating income rose 8%. And while the transportation company didn’t provide guidance for the fourth quarter (again… “bad”), the company said that cost cutting should continue to pay off.

Keep in mind, management said that uncertainty will remain in the industry. So JBHT is far from operating in a rosy environment.

But even though things are still “bad” for this transportation company, the stock jumped 18% on the news. And the stock could have a lot farther to go as investors adjust expectations.

“The best money is made when stocks go from terrible to just bad.” ~Peter Lynch

Take a look at the graph below. It plots analyst expectations for JBHT earnings over the next few years. You can see that for the past several quarters, analysts have been revising earnings expectations lower.

But following the company’s October report, analysts have just barely raised their expectations.

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This shift in profit expectations is enough to change a few investors’ decision to own shares of this challenged stock. And as more investors shift their perspective, the stock could continue to rebound!

Clearly a small change in sentiment can make a big difference in a depressed company’s stock price. And this week, I’ll be strongly considering a new position in JBHT for my Speculative Trading Program.

As we head into the thick of earnings season, be on the lookout for companies that have shifting expectations. We locked in some significant profits from UnitedHealth Group (UNH) over the past two months as that depressed stock also rebounded from its low.

Remember, shifting expectations can be a powerful catalyst for stock prices. Pay attention to situations where the narrative is changing. Because these situations can lead to significant profits if you catch them in time.

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