Sometimes, a company hits a stumbling block -- or several of them. The stock plummets, and investors lose faith. But, in some cases, these down-on-their luck companies are able to turn things around. And if you spot signs of a bright future early enough, you can get in on the stock at a bargain price -- and reap the rewards later.

Two possibilities today are Emergent BioSolutions (EBS -2.77%) and Invitae (NVTA). Their share prices have dropped 68% and 54%, respectively, over the past year. Both companies have catalysts ahead that could help lift the shares. But which is the better recovery-story buy? Let's find out.

Addressing threats to public health

Emergent BioSolutions specializes in products that address public-health threats. Among these are vaccines for smallpox and anthrax. The company also won contracts to produce coronavirus vaccines for Johnson & Johnson and AstraZeneca. Unfortunately, back in 2021, manufacturing errors led to a halt in production, and almost 400 million vaccine doses had to be destroyed, according to a Congressional investigation.

On top of that, shareholders sued the company, claiming it knew about quality control problems well before the incident. It's no surprise that Emergent's shares have since plummeted.

But the worst times may be behind Emergent. The U.S. Food and Drug Administration (FDA) recently approved the first over-the-counter nasal spray that reverses the effects of an opioid overdose: Emergent's Narcan. The product could be particularly important considering the scope of the opioid problem. More than 100,000 fatal overdoses occurred in the U.S. in a 12-month period ending last October, according to the FDA.

Narcan, as a prescription drug, posted an 8% gain in sales in the first quarter. Over-the-counter status clearly could boost growth. Still, Emergent's other products aren't high-growth -- and sales for most have even declined in recent times. So a lot is riding on Narcan.

Detecting genetic disease

Invitae is a genetic testing specialist. The company sells a variety of tests, such as cancer and cardiac screening tests, as well as carrier tests to determine whether you may pass a certain genetic disease on to your child.

The company has had no problem increasing revenue over the years. But it hasn't been able to turn that revenue into a profit.:

NVTA Revenue (Annual) Chart

NVTA Revenue (Annual) data by YCharts.

That's why last year Invitae launched a business realignment plan to cut cash burn and speed up the pace to positive cash flow. The plan involves exiting noncore businesses, and even some geographical areas with low growth. Invitae will focus on its highest-margin activities.

Invitae is starting to make progress. In the most recent quarter, the company reported a 10% gain in revenue -- if we exclude divested businesses -- and improvements in gross margin and cash burn. Gross margin based on generally accepted accounting principles (GAAP) reached 24.6%, up from 21.5% in the year-earlier period. And ongoing cash burn of about $50 million (excluding certain items) is lower than the previous quarter's $77 million. The company also reiterated its 2023 guidance.

Invitae shares remain in the doldrums, but continued progress of this strategic plan eventually could offer them a major lift.

Emergent or Invitae?

Both of these companies have been through difficult times, and the road ahead still may be bumpy. If you're a cautious investor, you're better off watching these players from the sidelines right now.

But if you're an aggressive investor looking for a recovery story, which one should you choose? I would go for Invitae. That's because the company has set out a clear plan with specific goals. And it's started to make some progress. It's also important to keep in mind that revenue has steadily climbed over the years, so demand for Invitae's products is strong.

Emergent's Narcan looks like a promising product, but it probably won't be enough to send earnings or the share price soaring. Right now, Invitae looks like a stronger recovery-story buy.