The exact definition of show stock or show quality is rather hard to pen down. A bird that does very well at a smaller show may fare poorly in a larger show--or it may kick butt.
Generally a SQ bird is one with absolutely no DQs and few faults. It comes very close to the Standard of Perfection for its breed and its variety.
Hatchery birds usually fall far short of the standard. DQs are common and faults are more so. You'll find incorrect skin/leg colour, incorrect or poorly shaped combs, size tends to be small for large fowl and large for bantams, patterns are less defined, type (shape and stance of the bird) is usually not quite right.
Yes, you can work to breed SQ from hatchery birds, but it will usually take years--far better to spend a bit more money to get good birds to start with rather than re-inventing the wheel. For most breeds you can get a descent bird without too great an expense.