I’m on the hunt for stocks to buy that are primed for a turnaround in the final quarter of 2022 and into 2023. 

But what constitutes a turnaround? The S&P 500 is down more than 23% year-to-date through Oct. 3. Is that the place to start? Or do we look for an even more significant recovery?

According to Finviz.com, there are currently 48 companies with a YTD return of -46% (double the index) or worse through the first nine months of 2022. I’ll find the three stocks to buy whose turnarounds you don’t want to miss.

In addition to losing 46% YTD, I’ll be sure to include companies from three different sectors whose return on assets is greater than 10%. If possible, I’ll also pick stocks with minimal debt and outperforming the entire U.S. market over the past five years. 

While this kind of exercise often ends in futility, the above-average bear market we’re experiencing should make it a little easier to find three good ones to buy.

Nvidia (NVDA)

At the time of writing, Nvidia (NASDAQ:NVDA) is down more than 58% YTD, 36% over the past year, and off by 176% from its 52-week high of $346.47. 

The designer of semiconductor chips for gaming, data centers, automotive, and augmented reality uses originally pioneered the graphic processing unit (GPU) and has gone on to do much more.    

I believe that CEO and co-founder Jensen Huang is one of the best and brightest chief executives in the S&P 500. In September 2021, I reminded readers that a $10,000 investment in its January 1999 initial public offering was now worth $8.5 million. 

As most investors are likely aware, Nvidia and most other semiconductor companies are encountering a business environment that is challenging, to say the least. Businesses and consumers are pausing spending, and when they open their wallets, supply chain issues make it tough to get enough products to market. 

This is why Nvidia’s Q2 2023 revenue only increased by 3% over Q2 2022 to $6.7 billion. However, the company still managed to generate $2.17 billion through the six months ended July 31. 

Huang said in the company’s quarterly press release that its automotive business is on its way to being a billion-dollar annual revenue generator. 

Nvidia’s return on assets as of July 31 was 18.9%, well above the company’s 15% criteria but significantly less than its five-year average of 24.63%. 

Under $100, it’s a deal of a lifetime. I’m not sure if it will fall that low, but back up the truck if it does.  

Bath & Body Works (BBWI)

Bath & Body Works (NYSE:BBWI) is down more than 53% YTD, 48% over the past year, and 152% from its 52-week high of $82. 

I happened to see a Morningstar.ca article from early September. Morningstar.ca Senior Editor Andrew Willis said BBWI was “Not to be confused with Bed Bath and Beyond.” I should hope not. One was a pump-and-dump from Ryan Cohen, while the other makes good money selling hand soap and body wash. 

As Willis stated in his article and video, BBWI had to return to earth after sales jumped more than 45% during the pandemic over pre-pandemic results. Ultimately, this company will be fine. I expect Bath & Body Works to grab more market share in the years to come. 

In the meantime, the company expects to earn $2.85 a share from its continuing operations in 2022, down from $3.94 a share in 2021. To counter the slowdown, management eliminated 130 positions across the company. These actions are expected to save the company $30 million in the second half alone. 

At its current share price, BBWI stock is trading at less than 12-times its 2023 earnings with a return on assets of 12.5% over the trailing 12 months ended July 30. 

The 21 analysts that cover BBWI stock rate it a buy with an average target price of $48.89, 50% above where it’s currently trading. 

IDEXX Laboratories (IDXX)

IDEXX Laboratories (NASDAQ:IDXX) is down more than 46% YTD, 45% over the past year, and off 50% from its 52-week high of $672.93. 

If you’re unfamiliar with Idexx, it is a manufacturer of diagnostic products for pets and livestock. Based in Maine, it also provides practice management software and consulting services to veterinary clinics. 

This company generates 65% of its $860.5 million quarterly revenue from the U.S. Its second biggest market is Europe, the Middle East, and Africa (19%), with the rest of the world accounting for the remaining 16%. 

A recent class action lawsuit filed against IDEXX alleged anticompetitive behavior by the company. This filing stated that the company has more than a 70% market share in the U.S. for point-of-care diagnostic products such as analyzers and single-use rapid tests. 

The company has said “the claims are meritless” and will do everything legally possible to defend itself against these allegations in the courts. 

It is not uncommon for companies with significant market share to be defendants in class action lawsuits. I wouldn’t be deterred from investing in IDXX stock. That said, it’s essential to be aware of litigation hanging over a business.

For all of 2022, this company expects organic sales growth of 5.5% to 8.0%, with earnings per share of $7.91 at the midpoint of its outlook. At 35-times its 2023 EPS estimate of $9.66, it’s considerably cheaper than its five-year average of 57-times its forward earnings.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.