Babies Out With the Bath Water

Turnaround Letter picks stocks from battered sectors.

By + More

I get a kick out of headlines—especially the ones MarketWatch runs in monstrous type (my favorite: "Bulls Want a Fed-Time Story" from last August's Federal Reserve meeting). So I had to share this gem from the latest issue of the Turnaround Letter, edited by George Putnam: "Did Some Good Babies Get Thrown Out With the Bath Water?"

The letter points to a handful of "battered gems" in industry groups that have performed the worst since the market peaked on October 11. These groups include mortgage investment, toys and games, semiconductor memory chips, jewelry stores, credit services, and office supplies. The letter highlights one company from each of these groups with "the best rebound potential without excessive risk." Stocks recommended include Annaly Mortgage, Mattel, SanDisk, Tiffany, American Express, and OfficeMax.