Aston Martin and Ocado prove the old mantra: just because a stock has fallen 90% doesn’t mean it can’t fall another 90%. Performance was poor when I bought them, and it’s stayed that way. They’ve had their moments, usually after better-than-expected results hinted at progress, but they’ve always slipped back.

Can these FTSE 250 stocks make a comeback?

They’re having a moment right now. Aston Martin shares are up 5% over the last week (and 13.5% over the month), while Ocado has jumped 13.5% in a week. Even so, they’re still around 27% lower than a year ago.

Here’s the strange thing: neither company has released results to justify the recent mini-recovery. Aston Martin posted its last set almost two months ago (25 February), revealing a 21% drop in full-year revenue to £1.3bn. Free cash flow weakened and net debt climbed another £200m to £1.4bn. There were some positives, as the board expects underlying operating profit to move towards breakeven. The shares nudged up on the day, but largely because investors had feared worse after a recent profit downgrade.

Ocado’s 2025 results (26 February), came in slightly ahead of forecasts, with revenue up 12% to £1.4bn. That’s despite prior news that major partners Kroger and Sobeys would scale back investment in its customer fulfilment centres (CFCs). The board is targeting £150m of cost savings by 2026 and hopes to turn free cash flow positive in the second half. But the shares fell on weak guidance.

Dare investors take a punt?

Threats remain. For Aston Martin, Donald Trump’s tariffs are a real blow, given the US generates roughly a third of revenues. It produced just 5,448 cars last year, so even a modest sales dip can hit profits hard. If rising oil prices push up interest rates, servicing its debt becomes even tougher. Cash flow is still expected to remain negative this year. It’s a hazardous road.

With Ocado, we need to see a steady rollout of new CFCs to justify the vast sums invested. Right now, it’s announced plans for just six. Ocado Retail, its joint venture with M&S, is performing well, but the shares will take another knock if the group fluffs its efforts to turn free cash flow positive. The latest cost-of-living squeeze won’t help.

Here’s the strange thing. Both companies make exceptional products. Aston Martin’s new Valhalla has drawn rave reviews. Ocado’s CFCs are feats of engineering. But they need to make money too, and these are unforgiving conditions.

I’d put the recent downward bounce to wider market volatility, as investors hunt for recovery plays during periodic bursts of optimism, often tied to hopes of a de-escalation in the Iran conflict. They could finally turn it on, but history suggests caution.

I can see far less risky recovery prospects elsewhere on the FTSE today.

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What on earth’s happened? Is this business really on the verge of collapsing? Or is the market overreacting and, in turn, creating a potentially lucrative buying opportunity?

Yet another sell-off

Sadly, the pressure on Ocado shares isn’t entirely unjustified. With its current warehouse automation technology proving economically unviable at scale, one of the firm’s largest customers, Kroger, announced it was closing three Ocado-powered customer fulfilment centres (CFCs).

In January, these closures took place, resulting in Ocado losing $50m in expected fee revenue during its 2026 fiscal year (ending in November) and beyond. Then, to make matters worse before the end of the month, another key customer, Sobeys, announced it too was closing one of its CFCs in Canada, lowering expected fee revenue by another £7m.

Nevertheless, even after the loss of Sobeys, management reiterated its goal of turning cash flow positive by November 2026. So you can imagine the horror when just one month later, Ocado released its 2025 results that stealthily changed the goal posts.

While the firm’s still expected to turn cash flow positive later this year, its full 2026 fiscal year will still see a £200m total outflow, with its first full year of positive cash flow pushed back to 2027.

Pairing that with delays in the opening of new CFCs alongside no new major contract wins, it isn’t surprising to see shareholders jump ship.

Needless to say, the situation looks dire. Yet, as previously mentioned, aggressive sell-offs can create tremendous long-term buying opportunities. And this is where things get interesting…

Ocado’s hidden value

Despite all the frustrating setbacks, Ocado has actually delivered on a crucial milestone that most investors are overlooking right now: its earnings inflexion is real.

Underlying EBITDA in 2025 surged 59%, from £112m to £178m, driven primarily by its robotics technologies, with profit margins expanding from 16.2% to 25%. And looking at guidance, even more earnings growth is expected in 2026 with technology margins reaching 30%.

Meanwhile, while Kroger and Sobeys have pulled back on planned spending, they paid a hefty compensation fee for doing so. As such, Ocado now has close to £740m of cash & equivalents on its balance sheet, providing a powerful liquidity buffer to see it through its journey towards becoming cash flow positive.

Providing that the business does indeed see a full year of positive cash flow in 2027, Ocado’s financial risk will likely fall drastically. And that sets the stage for a potentially explosive comeback story, if it can start attracting new customers.

What’s the verdict?

Good execution combined with continued cost discipline could see this business enter a new, more profitable chapter of its long-term journey. And for investors brave enough to buy, this stock could prove to be a lucrative winner in the coming years.

However, with such a poor track record so far, I’m not ready to make that leap of faith just yet. For now, I think there are far better stocks to consider buying in 2026.

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But investing isn’t all champagne and steaks, there’s inevitably the odd dollop of thin gruel too. In my case that comes in three stubborn lumps. By sheer coincidence, the three worst performing stocks in my SIPP all published their full-year results either yesterday (25 February) or today, and they all stank. So do I finally pull the plug?

Aston Martin shares are a car crash

James Bond car maker Aston Martin Lagonda (LSE: AML) is the worst of the lot. If this FTSE 250 stock were a movie franchise, it would a total horror show. The shares fell another 12.5% today and are down 93% over five years. I’m nursing a roughly 70% loss, which almost feels like a win in comparison. Thankfully, I only invested a tiny sum.

Yesterday’s numbers were ugly. Revenue dropped 21% to £1.3bn and net debt climbed to £1.4bn, as weak demand and tariffs bit. Management is cutting more jobs while blaming geopolitical turmoil and macro pressures.

One danger with horror stocks like this is that they always look on the brink of a comeback, only to keep flopping. My stake is now so small it’s hardly worth selling. I’ll hold it for novelty value and as a lesson learned. I wouldn’t suggest anyone considers buying it though.

Ocado is a stinky cheese

Ocado (LSE: OCDO) is almost as big a car crash. It’s down 90% over five years and I’m sitting on a 47% loss.

The FTSE 250 stock slid 10% on this morning’s results before recovering slightly, after it unveiled plans to slash around 1,000 jobs in a bid to save £150m. Its automated customer fulfilment centre (CFC) rollout has hit setbacks, with key US partner Kroger and Canada’s Sobeys both pulling back.

There was a glimmer of hope here. Underlying core earnings jumped to £178m and management reckons Ocado will become full-year cash flow positive in 2026/27. That would be a milestone for a business that has burned through money for years.

It still needs more CFC to convince the market and again, I wouldn’t buy more or urge anyone else to consider piling in. I may be mad but I’ve been through so much, I’ll stick with it.

Diageo must fight back soon

FTSE 100 spirits giant Diageo (LSE: DGE) is my great recovery hope. The one I really went to town on. And once again it’s disappointed me.

The shares plunged 12.7% yesterday after new chief executive Dave Lewis cut the dividend and lowered guidance following tough US trading. They fell again today and are down 45% over five years.

I’m worried about the impact of weight loss drugs and changing drinking habits. But Diageo still owns a brilliant portfolio of global brands and generates plenty of cash. When consumers feel richer, I suspect they’ll be thirsty again. I won’t be selling. I’m even tempted to buy more, but averaging down on Diageo is a habit I need to quit.

So I’ll hold all three. I’m pretty confident about Diageo, still, but the other two are complete punts. Investors hunting for top FTSE stocks probably shouldn’t start here.

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And the stock was up to its old tricks today (26 February), shedding another 9% after the grocery-robotics firm published its FY25 annual results.

Shockingly, this means Ocado stock has lost 92% of its market value since September 2020!

What on earth has gone wrong?

As I see it, Ocado essentially has two parts to its business. There’s the online supermarket operation in partnership with Marks and Spencer, involving those delivery vans zipping about everywhere. Ocado Retail, while deconsolidated from group financial results, is enabled by its Ocado Logistics unit.

Then there’s the Technology Solutions bit, which powers robot-operated warehouses for overseas grocers like Kroger (US), Aeon (Japan), and Coles (Australia). This is where the real growth potential has always resided.

The share price’s peak coincided with the height of the pandemic, a time when online grocery deliveries boomed. Since then, loss-making Ocado has failed to convince investors that its capital-intensive business model can ever generate reliable profits.

Moreover, partners Kroger and Canada’s Sobeys have decided to close some underutilised customer fulfilment centres (CFCs). This has hammered sentiment for the FTSE 250 stock, which is now down 37% in six months.

FY25 results are out

However, Ocado is still managing to grow. In the 52 weeks to the end of November, revenue was up 12.1% to £1.36bn, with double-digit growth in both divisions (Technology Solutions and Ocado Logistics).

There were 72m orders shipped worldwide in the year, representing 26% growth in weekly CFC volumes. However, only four modules were added to CFCs in the US, UK and Poland.

The biggest problem for Ocado has been its hefty losses, with profits always just over the next horizon, despite being founded almost 26 years ago. And while adjusted EBITDA jumped 59% to £178m, there was still a £353m adjusted loss.

Looking ahead however, management expects the business to turn cash flow positive in the second half of this year, before making that a full year in 2027. And it anticipates up to 25 new CFC modules over the next couple of years, offsetting the closures in North America.

Unfortunately, 1,000 jobs will be axed to help save £150m (around 5% of its global workforce), with most coming at its HQ in Hertfordshire.

Time to buy?

On a positive note, exclusivity arrangements have now concluded in most international markets. This leaves Ocado free to pursue new partnerships and growth opportunities.

But will any overseas supermarkets take the leap? Many are focusing on fulfilling online orders from stores, which involves good old flesh-and-blood humans rather than new-fashioned robots.

Perhaps this will change in future, but for now this seems to be the reality. The fact Kroger and Sobeys are downsizing isn’t a good signal to other retailers.

If Ocado lands new contracts and turns cash flow positive, the stock could rebound strongly from just over 200p today. However, due to the uncertainty and ongoing losses, I’m not convinced enough to invest.

To my mind, there are better growth stocks to consider in the FTSE 250 today.

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The online grocery retailer and warehouse automation specialist has encountered a long list of problems over the years, from rising costs to top-tier customers rethinking their relationships.

The latter has been particularly painful. However, with Kroger breaking its contract, Ocado’s getting a handy short-term cash injection. And with its exclusivity requirements now out the window, the group can pursue other relationships to get operations back on track.

So could investors be looking at the beginning of a multi-year recovery story?

The bull case

The setbacks with retailers such as Kroger and, more recently, Sobeys have proven that Ocado’s original ‘one-size-fits-all’ warehouse automation business model has failed commercially. The high initial capital costs simply make it too financially challenging for customers, even in the long run.

In response, Ocado’s been shifting towards a more modular deployment approach, allowing retailers to use Ocado’s robotics and automation solution at a much smaller scale and with a much smaller initial capital commitment. And there are some signs this new approach could be working.

In fact, Ocado could be on the verge of turning cash flow positive this year. And providing no more surprise spanners are thrown in the works, by 2027, that could turn into positive free cash flow – a critical step towards financial independence.

If Ocado can demonstrate a path to profitability with its robotics technology, and its online grocery joint venture with Marks & Spencer continues to perform robustly, then this FTSE 250 stock could indeed be set for a rebound.

The risk remains high

Kroger’s decision to shut down three of its eight automated Ocado-powered customer fulfilment centres is a major red flag. If one of the largest retailers in the world was unable to make the technology work, convincing other smaller retailers to try is going to be a tough sell for Ocado’s marketing team.

Another significant challenge is the firm’s problematic debt. With £1.8bn of expensive debt & equivalents on its balance sheet, the firm’s now bleeding more than £100m a year to interest payments alone.

Luckily, management’s receiving $350m from Kroger as a penalty for breaking its contract, which has put aside any immediate liquidity crisis. But that’s ultimately only a short-term fix. If Ocado isn’t able to reach its goal of turning free cash flow positive next year, the debt problem could once again re-emerge down the line.

The bottom line

Looking ahead, there’s a plausible future where Ocado’s change in strategy puts the business back on track within a few short years. However, this is going to be an uphill battle dependent on strong execution. And with no new partner announcements made since the group’s exclusivity ended, the risk-to-reward ratio doesn’t look particularly enticing right now.

The company is reporting earnings later this week, so it won’t be long before investors get a detailed update on how things are progressing. For now, I’m keeping Ocado on my watchlist and looking for other opportunities in the FTSE 250.

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When good news lands, Ocado shares can surge. When bad news hits, as it all too often does, the punishment is brutal.

The most recent blow came from US partner Kroger scaling back automated warehouse deployments. That sends an uncomfortable signal to other potential customers. CEO Tim Steiner remains a firm believer in Ocado’s state-of-the-art technology. Investors need more convincing. Will they be convinced on Thursday (26 February) when Ocado publishes full-year 2025 results?

Volatile FTSE 250 stock

Whatever happens, I expect a sharp move in the shares. Volatility is now standard whenever Ocado reports. Sometimes, the shares go bananas.

On 17 July last year, the stock jumped 13% after half-year results showed group revenue rising 13.2% to £674m and adjusted EBITDA earnings soaring 77% to £91.8m. Ocado even swung to a statutory profit of £611.8m, compared with a £153.3m loss a year earlier.

Ocado Retail, its 50/50 joint venture with Marks & Spencer, posted a 16.3% rise in revenue to £1.52bn. So the underlying business isn’t quite as bleak as the share price suggests.

What investors really want now is clear progress on cash generation. Cash outflows have been narrowing, from £201m in H1 2024 to £108m a year later. Steiner says Ocado’s priority is to become cash-flow-positive in full-year 2026. If Thursday’s update shows stronger-than-expected progress towards that goal, investors could finally have something concrete to cling to.

They’ll scrutinise revenue growth, margins and cash flow across both Technology Solutions and Ocado Retail, searching for signs of sustainable, profitable growth. Any positive news on warehouse rollouts would be warmly received, but I’m not holding my breath.

Ocado has been cutting jobs and costs to stem losses and improve cash flow. But there’s always a risk that trimming too aggressively undermines its technological edge.

A big day for investors

It’s rare for one set of results to feel make-or-break. But shell-shocked investors are desperate for evidence that the long-promised turning point is real. I’ve seen plenty of one-day spikes over the past few years, only for the shares to drift back as investors take advantage of the bounce to exit their position and get on with their lives.

There are major potential risks this week. Any bad news on warehouse rollouts is the biggest. Continued losses or disappointing cash-flow commentary would quickly dent confidence. The M&S joint venture looks like the steadier long-term growth engine, but investors will want reassurance here too.

Thursday 26 February does feel like judgement day. Then again, it often does with Ocado. Investors might finally have something to celebrate. But I don’t think the shares are worth considering today and believe Ocado is best observed from a safe distance.

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Recent problems

The latest issue that has spooked some investors this month (February 2026) is the news that Ocado is cutting around 1,000 jobs globally. In some ways, this shouldn’t surprise people. The company has been shedding jobs over the past year as it seeks to cut costs across the board. However, ahead of the full-year results due out at the end of the month, it isn’t a great sign for investors. If anything, it shows that the company needs to cut even more aggressively to try and get finances under control.

If we take a step back, one of the core problems that has always put me off investing in the business (regardless of how cheap the stock might look) is the lack of profitability. The company has simply been losing money year after year. It generates billions in revenue but still makes losses. There comes a point where investors want profits, not just future growth stories.

Finally, late last year the news broke that Kroger (Ocado’s biggest international partner) was closing three automated warehouses. This has caused doubts about future US expansion for Ocado, on top of the loss of around £37m in recurring revenue.

Catalysts for a rally

Logic tells me that if Ocado doesn’t go bust, the share price can’t fall forever. Intrinsically, there’s value in the company. Yet for people to believe that this value could increase, something needs to happen.

One catalyst would be the signing of a new global partner. These are lumpy and significant deals, which not only would provide a material long-term boost to revenue but also offer credibility with a suggestion that the business model and tech platform works.

Another factor could be a continued fall in inflation, helping to boost profit margins for the grocery division. Data released earlier this month showed January price inflation was 4%. This was a drop from the 4.3% reading from December and the lowest level since April 2025. If this trend keeps going, it could help Ocado to get closer to posting a profit, even if revenue stays the same.

Tough to be optimistic

But even with potential positive signs, I struggle to see any reason right now to make me want to buy the stock. Just because the share price is heavily depressed doesn’t mean it’s definitely undervalued. If anything, there’s a strong argument to be made that it’s fairly valued, given the associated problems.

If we do see some event trigger a move higher, then I’d evaluate it to see if it changes the outlook, but until that time, I’m going to steer clear.

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The once beloved online grocery and warehouse automation enterprise thrived throughout the pandemic, using its surging cash flows to invest in robotics technology. And within the five-year period between January 2016 and 2021, the growth stock surged by over 741%.

Yet skip ahead to 2025, and these phenomenal gains have all been given back. Soaring energy costs, rising interest rates, underperforming returns for business customers, and the loss of pandemic-driven online grocery shopping tailwinds have dragged its valuation into the mud. So much so that the stock now trades near a decade low.

But with its retailer exclusivity deals now ending and its technology solutions finally starting to generate some underlying earnings, could 2026 be the beginning of a massive and spectacular turnaround?

The bull case

The recent revelation that Kroger is shutting down three of its Ocado-powered customer fulfilment centres (CFCs) understandably shook investor confidence, even though Kroger is retaining others.

While it’s a concerning development, this decision also created a lot of breathing room and temporarily solved the group’s short-term liquidity crisis. That’s because Kroger is compensating Ocado with $350m, giving the company more time to grow its technology profits and allowing the business to refinance its debts that were maturing towards the end of 2026.

Speaking of technology profits, underlying earnings across the first half of 2025 came in at £72.8m – a 109% year-on-year improvement. And assuming there are no more surprise spanners thrown into the works, management is confident in finally becoming cash flow positive in 2026.

Combining all this with the previously mentioned termination of its exclusivity agreements means the business is now free to approach new retailers simultaneously, potentially unlocking multiple new revenue sources in the process.

In fact, this improved financial outlook and superior revenue diversification are why the FTSE 250 stock has already surged by almost 60% since December 2025.

The bear case

While there are multiple growth catalysts seemingly on the horizon, Ocado is by no means a guaranteed success story. A sudden resurgence in energy prices or slowdown in retail spending due to wider macroeconomic pressures could all undermine management’s 2026 cash flow aspirations with little recourse available.

The $350m from Kroger definitely helps. But it’s ultimately only a temporary solution. And consequently, if cash flow generation does underperform, the business could be facing yet another liquidity crisis later on.

Then there’s the question of acquiring new customers. Ending exclusivity does indeed provide flexibility. But convincing other retailers to invest potentially billions into Ocado’s technology when industry titans like Kroger don’t believe in it is undoubtedly going to be a difficult task for the sales team.

The bottom line

Overall, buying Ocado shares today feels highly speculative. Even the recent rally is being driven primarily by expectations of a potential turnaround. But with a long track record of missing targets and disappointing results, this isn’t a stock I’m rushing to buy right now.

Instead, it’s staying on my watchlist. Once the group’s next set of results is presented next month, investors will gain a clearer picture of the progress being made, especially when it comes to cash flow. Until then, I think there are far better FTSE 250 opportunities to explore.

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I hold Ocado shares myself, so I’m loving this moment. But I’m also wary. The FTSE 250-listed grocery tech specialist has a history of extreme volatility. It boomed during the pandemic, when the nation was locked down and food delivery orders were flying, but it’s been mostly downhill since. Until now.

Five years ago, investors were crazy for its robot warehouse technology. Its state-of-the-art customer fulfilment centres (CFCs) wowed supermarkets around the world, notably Kroger in the US, but also in Sweden, Japan and beyond.

FTSE 250 recovery star

There was a problem though. CEO Tim Steiner was pouring money into his beloved bots, but the returns weren’t coming fast enough. The company was years away from turning a profit while debts rolled up. When inflation took off, servicing those debts became even more expensive, and investors fled. The shares crashed more than 90%, peak to trough.

Last year brought another brutal blow, as Kroger scaled down its CFC commitment, in what some feared would be a death knell for the tech. Since then, the good news has started to trickle in. On 5 December, it agreed to pay Ocado $350m in compensation, which should come in handy. Kroger will also continue running centres in high-volume hubs in Ohio, Texas, Georgia, Colorado and Michigan.

Ocado’s overlooked online grocery joint venture with Marks & Spencer is also doing nicely. Sales surged 15.8% in the 12 weeks to 30 November, Worldpanel data showed, well ahead of second-placed Lidl at 10.2% and big gun Tesco at 4.7%.

Free cash starts flowing

The Ocado share price got another boost on 30 December when the board ended mutual exclusivity with retailers in most of its markets, including the US. This opens up new growth opportunities. Then yesterday (6 January), JPMorgan gave the shares a further kick by placing Ocado on its “positive catalyst watch”, citing its improving balance sheet. It expects good news on free cash flow at full-year results on 26 February. Margins look brighter too. Shares jumped 10% that day. They’re up another 4% this morning.

In total they’ve skyrocketed 46% in the last month, which would have turned a £10,000 investment into £14,584. But let’s not get carried away. The vast majority of investors are still nursing big losses, including me. Despite that jump, the Ocado share price is down 89% over five years. That’s the problem with losing money. It takes a lot of growth to claw it back.

This stock is still too risky for most investors. For those willing to take a punt, I’d urge them to sleep on it. I’ve seen spikes in the Ocado share price before, and they’re often followed by a quick retreat. I do think the shares might be worth considering with a long-term view, but only for investors who understand the risks and can afford to take the chance. They could deliver outsized rewards, but strong nerves are essential.

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But for investors with a higher appetite for risk, the allure of rapid, short-term gains can be hard to ignore. Some opt for promising penny stocks that could rally tenfold in a year. Others see potential in beaten-down blue chips selling for a fraction of their fair value.

For these speculative investors, the UK stock market currently offers two options that are arguably the biggest ‘risk/reward’ opportunities of 2026. Both are trading at low valuations after a bruising 2025, and both face a defining 12 months that will either trigger a massive recovery — or a liquidity crisis.

Aston Martin Lagonda

Aston Martin Lagonda (LSE:AML) enters 2026 fighting for its financial independence. After significant cash burn in 2025 led to a credit rating downgrade, the share price reflects extreme pessimism. It’s fallen by 42% this year following a £323.5m earnings loss in 2024 — despite making £1.58bn in revenue.

Now, the most bearish scenario would be if the company runs out of cash and is forced into a highly dilutive rights issue.

But on the bullish side, there’s the ‘Valhalla’ catalyst. In 2026, the luxury car marker is scheduled to deliver its high-margin Valhalla supercars. Previous launches have been plagued by supply chain issues, so this cycle is critical. If the company hits its target of becoming free cash flow neutral in 2026, the thesis for expecting the share price to fall collapses. A transition from ‘debt-ridden disaster’ to ‘profitable luxury brand’ could see shares double or triple from current lows.

The key risk is the possibility that delivery delays return or that cash burn persists past Q2. Then, the company may be forced to raise equity at a rock-bottom price, crushing current shareholders.

Ocado Group

Ocado Group (OCDO) has long been the ‘jam tomorrow’ stock of the UK market, but 2026 is the year the jam must finally be served. Management has staked its reputation on turning cash flow positive by the 2025/26 financial year.

The bullish case here is one of vindication: its business model turns profitable and it proves the naysayers wrong. The heavy capital expenditure phase for building robotic warehouses is tapering off. If Ocado reports a statutory profit or genuine positive cash flow, it validates the technology licensing model.

With high interest from short-sellers still weighing on the stock, a positive financial update could trigger a violent short squeeze, potentially delivering huge gains as institutional money floods back in.

The risk, of course, is that it stumbles through another year of failure. If the 2026 target is missed, the market will likely conclude the model is structurally unprofitable. Without the ‘cash flow positive’ signal, funding could dry up, sending the stock to new all-time lows.

Final thoughts

Both Aston Martin and Ocado offer exposure to two massive potential turnarounds. But potential investors should take heed: 2026 is the final deadline for both management teams to deliver.

Personally, I find the risk to be outside my comfort zone. But for investors willing to stomach the potential volatility, it may be worth considering a small position in either – as part of a diversified portfolio, of course.

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