Analysing the worst-performing investments in the market can occasionally reveal fantastic candidates to add to my ‘best stocks to buy’ list.
After all, when investors flee and panic sell, troubled businesses can end up being punished too harshly, creating lucrative buying opportunities for long-term investors. And looking at its five-year performance, Aston Martin Lagonda (LSE:AML) shares definitely fall within the worst-performing category.
For reference, the luxury automaker has seen its share price plummet from around 725p in April 2021 to just 45.8p today – a 93.7% implosion.
What happened? And could it secretly be among the best stocks to buy now that it’s trading near a new 52-week low?
How did we get here?
Aston Martin’s probably best described as a globally iconic brand with a chronically broken financial structure. Its downfall hasn’t come from a single catastrophe, but rather a series of compounding operational errors that have left the business deeply indebted and long-term shareholders extremely diluted.
While far from perfect, demand for its luxury cars remains relatively solid for both its higher-tier consumer models like the Aston Martin DBX, as well as more affluent car enthusiasts for its supercars like the Valhalla. The problem lies with supply.
Continuous delays due to internal production complexities have resulted in vehicles leaving the factory much slower than anticipated. Although, to be fair to management, the challenges haven’t all been internal.
Aston Martin has suffered from some pretty relentless external headwinds during this time, including tariffs, surging inflation, trade route disruptions, and a broader softening of the luxury market, which have also weighed heavily on its car volumes, right when Aston Martin needed growth the most to get its debts under control.
However, with its market-cap now sitting at just £472m against a £1.26bn revenue stream, it begs the question: has a secret buying opportunity emerged?
An incoming recovery?
Despite all the challenges the business continues to face, investors might be looking at a valid and compelling turnaround story here.
Deliveries of its long-anticipated Valhalla supercar officially started during the last quarter of 2025, with management expecting deliveries to accelerate throughout 2026.
At the same time, through operational improvements as well as a more favourable sales mix, profit margins are also expected to start recovering this year. In the words of leadership:
“Gross margin is expected to improve into the high 30s% (FY 2025: 29%), benefitting from more efficient production, an expanded range of core model derivatives, a full year of Valhalla deliveries and a continued focus on maximising the value in every vehicle sold”.
So what are the main risks investors need to watch out for?
What to watch
The Aston Martin brand remains world-class. But as previously mentioned, it’s also one that remains surrounded by weak financials. The group’s net leverage ratio stands at a staggeringly high 12.8 – that’s not a weak balance sheet, that’s a severely distressed one.
If the company delivers on its margin targets for 2026, leverage may indeed start moving back in the right direction. And that could even pave the way for a re-rating of Aston Martin shares in the eyes of investors. But if not, shareholders may once again be in for another round of painful dilution.
That’s why, despite the turnaround potential, I don’t think Aston Martin is among the best stocks to consider buying. At least, not yet.
It’s a company definitely worth watching. And if the business starts to show meaningful and sustainable signs of improved profitability, then it could quickly become a more compelling investment.
