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Tickers in this Article: EAT, EK, GT, C
I like to review beaten down stocks because the optimist in me believes that there's always the possibility of finding a real bargain with upside potential. I've done a search of stocks trading under $10 per share and found four that are worth a spot on investors' radar screens.

The four listed below are generally well-known names that have fallen from grace. Perhaps their share prices have dropped due to macroeconomic issues, company specific issues or a combination thereof. What's important now is whether these stocks can climb back out of the gutter.

The Mean Citi Streets
One-time financial giant Citigroup (NYSE:C) has been pummeled over the last year thanks to lingering economic crisis. At $8.29, the shares are currently more than 70% off their 52-week high of $35.29.

However, some hefty players haven't given up on Citi. Mexican billionaire Carlos Slim and his bank Inbursa bought up to $150 million in Citigroup shares last week, according to an article from November 26. The U.S. government is also in the mix, as is Saudi investor billionaire Prince Alwaleed, who was reportedly going to up his stake in the company. Citigroup is also working to cut costs.

To be clear Citi isn't without risk, and there are no guarantees. I am also concerned about the potential for tax loss selling in December. I think bargain hunters should wait for a greater sense of stability before nibbling, but this is one of those stocks that has been so beaten down that even a small flurry of good news could send it materially higher in 2009. (For a detailed explanation of tax loss selling, read Selling Losing Securities For A Tax Advantage.)

Brinker Worth a Bite?
The slowing economy has caused people to dine out less frequently or to try to make their dollars go further when they do. This means that sit-down restaurants like Macaroni Grill and Chili's, owned by Brinker International (NYSE:EAT), are having a tough time. As evidence of how tough things are, one need only peruse its stock price of $6.64 as of Friday, and its most recent guidance.

For fiscal 2009, Brinker now expects earnings per diluted share to decline 15-25% compared to fiscal 2008, before special items and excluding the operating results of Macaroni Grill. Previous guidance from the company had called for growth, yes growth, of 8-10%.

However, if the outlook for the economy improves, I think that the shares could rise in anticipation of more favorable earnings down the line. For what it's worth, there was one recent insider purchase. Wyman Roberts, an officer purchased 5,000 shares at just over $4 on November 21, according to data from Yahoo Finance.

Again, there are no guarantees and tax loss selling remains a concern. That said, Brinker has a great name, great locations, and many people are fans of its restaurants.

Kodak's Oversold
In its Q3 earnings report from October, digital imaging company Eastman Kodak (NYSE:EK) said it was looking for total revenue to decline 3-5% for the full year. That's not overly inspiring.

Optimists like me, however, would point out that in the quarter the company was keeping a close eye on expenses. SG&A costs were down 14% in Q3 versus the previous year. The picture could improve down the line due to Kodak's growing digital business. My interest has perked up recently because the shares are now in the mid $7s, or a little more than 20% lower than when I last wrote about the company in early November. In short, I think the stock is oversold.

Turn a Bad Year Into Your Gain
Well-known tire company Goodyear Tire (NYSE:GT) beat the pants off of earnings expectations in its latest quarter. I think the company has terrific long-term potential given that, as a society, we are not likely to quit driving anytime soon.

With the shares more than 70% off their 52-week high, I think tax loss selling could be an issue, but Goodyear's long-term potential piques my interest as does its earnings potential in the coming year. At present, the company is expected to earn $1.52 per share this year and $1.45 per share next, according to date from Yahoo Finance. That's interesting given that the shares currently trade under $7.

Bottom Line
It's a quirk of human behavior that we instinctively believe stocks that go down, must come back up. Sometimes, they just keep going right down to zero. That's why it's important to do you homework on a company. I've highlighted four companies that have the potential to rebound as the economy picks up; if what's I've said makes sense to you, now it's your job to dig deeper.

To get started on a full analysis of these companies and other rebound candidates, read Due Diligence In 10 Easy Steps.

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