BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) and Bombardier Inc. (TSX:BBD.B) have both seen better days, to say the least. Each company has had its day in the sun, a time when it was a true Canadian champion. Now, both companies are struggling to make money and are facing uphill battles against better-funded competitors.

Along the way, their stock prices have been crushed. BlackBerry shares once traded for roughly $150, but now fetch less than $15. Bombardier shares are still trading lower than they were 20 years ago.

Each of these companies can thus be classified as a “turnaround stock.” But which one is the better bet?

The case for BlackBerry

In my opinion, there are a few big reasons to prefer BlackBerry over Bombardier.

Most importantly, BlackBerry’s turnaround has already begun. The company hit rock-bottom back in late 2013 (its stock price backed up that fact) about the time John Chen took over as CEO. Since then, a lot of fat has been cut out, and the company is more focused than ever before. Meanwhile, Bombardier is still banking on its CSeries jet.

Second, BlackBerry’s balance sheet is in much better shape than Bombardier’s. To put this in perspective, BlackBerry has US$500 million in net debt, about 10% of the company’s market value. Meanwhile, Bombardier has more than US$5 billion of net debt, or more than 130% of the company’s value. So, if Bombardier’s turnaround isn’t successful, the company could be in serious trouble.

Third, Mr. Chen has proven himself to be a successful turnaround artist, having previously rescued troubled enterprise software company Sybase. Bombardier, on the other hand, just fired CEO Pierre Beaudoin after years of underperformance. Replacing him is Alain Bellemare, who is still unproven as a CEO, and also unproven as a turnaround artist. He may do a fine job, but I’d still rather put my money behind Mr. Chen.

The case for Bombardier

The case for BlackBerry is strong, but there are still a couple of big reasons to prefer Bombardier.

First of all, most of the company’s business has continued to perform well. Just last year, revenue increased by more than 10%. So, it’s not like the company’s brand is damaged. The same can’t be said about BlackBerry, whose handset sales continue to decline, and whose revenue numbers have disappointed across the board.

Second, Bombardier is cheaper. The company’s market value is less than $5 billion, not much for a company with over US$20 billion in revenue. Even after adjusting for debt, this seems like a very cheap stock. Investors clearly don’t have much faith in the company.

BlackBerry is more expensive, and reflects a greater degree of optimism among investors. To illustrate, the company’s market value is a shade above US$5 billion, about 1.5 times last year’s revenue. The stock is up about 60% since its low in late 2013.

The verdict

You hear it all the time: the greater the risk, the greater the reward. This case is no exception, with Bombardier clearly being the riskier stock, and the one having more upside.

That said, I still wouldn’t buy either of these companies. Both of them have a lot of problems, and in my opinion, their share prices don’t yet reflect these issues. There may be a better opportunity down the road, but for now it’s best to remain patient.

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Fool contributor Benjamin Sinclair has no position in any stocks mentioned.