As the new year approaches with the market at historic highs, it might seem tough to find any bargains or contrarian plays. But there are still plenty of well-known companies that struggled last year but could stage turnarounds in 2017. Let's take a closer look at four companies that need 2017 to be a much happier year than 2016.

Gettyimages

Image source: Getty Images.

IBM

IBM (NYSE:IBM) is one of Warren Buffett's favorite stocks, and it has rebounded 20% this year on robust demand for high-yielding dividend stocks with low valuations. But Big Blue remains down 10% over the past five years, and it has posted 18 straight quarters of year-over-year sales declines. Analysts expect the company's sales and earnings respectively to fall another 2% and 10% this year.

IBM's ongoing problem is that its higher-growth strategic-imperatives (cloud, analytics, mobile, social, security) businesses aren't growing quickly enough to offset declines at its aging IT services, software, and hardware ones. To make matters worse, the company's strategic imperatives face cutthroat competition from entrenched rivals in areas like cloud infrastructure. If IBM finally breaks its streak of top-line declines next year, it could become a solid mature tech investment again.

Chipotle

2016 was certainly a year to forget for Chipotle (NYSE:CMG). The Mexican food chain has posted four straight quarters of annual sales declines due to multiple incidents of foodborne illness in 2015 tarnishing its brand. Aggressive marketing campaigns, giveaways, and a new loyalty program have throttled those declines, but the stock remains down 20% for the year.

Analysts expect Chipotle's sales to fall 13% this year but potentially rebound 16% next year, based on the recovery of its namesake brand and its expansion into adjacent markets with secondary brands. However, those expansions could "diworsify" Chipotle -- it recently shuttered its ShopHouse Asian Kitchen concept stores, and its new Tasty Made burger store indicates that the company is suffering an identity crisis. In 2017, investors should see if Chipotle can break its streak of top-line declines, or if it continues losing customers.

GoPro

GoPro (NASDAQ:GPRO) lost nearly 50% of its market value in 2016. Sales continued falling due to waning demand for action cameras, and the company botched the launch of its long-awaited Karma drone with a delay and an embarrassing recall. Sales of its Hero 5 cameras also got off to a rocky start with a pricing dispute.

To offset that damage, GoPro laid off 15% of its workforce and shuttered its rudderless media division. But it's doubtful that cutting costs amid tough competition can help GoPro get back on track and return to profitability. 2017 will be a decisive year for GoPro: If it fails to capture the public's attention with new cameras, the devices could fade away like Cisco's Flip cameras. But if it stages an eleventh-hour turnaround with a popular new device, the stock could be a huge bargain at 1.2 times trailing sales.

Polo Ralph Lauren

Like many of its retail peers, Ralph Lauren (NYSE:RL) has seen declining sales due to competition from fast-fashion players like H&M and Zara, fickle consumer tastes, and a seismic market shift toward e-commerce. But last year, Ralph Lauren hired fast-fashion expert Stefan Larsson -- the former H&M exec who turned around Gap's Old Navy brand -- as its new CEO. That hire didn't reverse Ralph Lauren's 20% decline this year, but Larsson has launched an aggressive turnaround plan for the retailer.

Larsson is shuttering 10% of Ralph Lauren's brick-and-mortar locations, laying off 8% of its workforce, reducing shipments to department stores to boost demand for rarer items, and limiting markdowns to preserve the brand's premium appeal. That plan could generate annual savings of $180 million to $200 million, which will be initially offset by a $400 million restructuring charge in fiscal 2017. I'll be watching Ralph Lauren closely next year to see if those moves pay off.

The key takeaway

2016 wasn't a great year for IBM, Chipotle, GoPro, and Ralph Lauren investors, but 2017 might be a bit better -- if the companies can successfully execute their turnaround plans. Yet each of these stocks carries its own distinct risks: IBM faces intense cloud competition, Chipotle remains pricey at 43 times forward earnings, GoPro's core market is being commoditized, and Ralph Lauren faces a tough uphill battle in the brutal retail apparel market.

Leo Sun owns shares of Cisco Systems. The Motley Fool owns shares of and recommends Chipotle Mexican Grill and GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool recommends Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.