The last two months have witnessed one of the greatest equity rallies of the last 100 years. The S&P 500 index bottomed on March 9 at 676.53, and it has since rallied to a close of 909.24 on May 11. This 34% move in the market has astounded bears who thought the Great Depression II was starting, and delighted beaten-down, long-only investors.

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Some Boats Not Rising With The Tide
The purpose of this article is not to solve the question of whether we are in a bear market rally or the beginning of a new bull market. Instead, I want to point out several stocks that have not participated fully in the rally, and thus may provide an investment opportunity.

Investors need to remember that there was probably a good reason some of these stocks didn't participate in the rally, and more research is required before jumping into these names. One stock in this category is General Motors (NYSE:GM), which is trading below its March lows on speculation that a bankruptcy filing is unavoidable. The stock hasn't traded this low since 1934, and even company executives are selling shares.

Four Others That Have Significantly Underperformed The Rally
Eastman Kodak (NYSE:EK), whose storied history is actually greater than that of General Motors, is off its March lows but dragging along at around $2.98 per share (as of May 11). The company, which had been trying to make the transition to the digital age, reported a large loss in the first quarter and had to suspend its dividend. The interesting part is that Kodak is in a zero net debt position with its cash and equivalents slightly higher than its debt as of March 31.

KeyCorp (NYSE:KEY) is also trading at the lower end of its 52-week range. The bank was one of the 19 recently assessed as part of the Supervisory Capital Assessment Program (SCAP). KeyCorp was rallying nicely with the rest of the financial sector until it announced a $750 million issuance of common stock. Investors have reacted negatively to this news, but it's possible that this is a short-term reaction, and the capital raise makes the company more likely to survive long term.

Pepsico (NYSE:PEP) is up about 13% from the low of $43.40 it traded at in March. The company is solidly profitable but may have suffered from sector rotation, as investors view its products as recession resistant and have sold the stock to move into names with a higher beta. The company is also involved with a rather nasty dispute with its bottlers.

Another stock that might be suffering from investor flight to names with more upside is McDonald's (NYSE:MCD), which is about 19% above its March low of $45.79. Many consumers substituted fast-food restaurant trips for more formal dining during the recession, and this kept investors in the stock until recently.

Some may be concerned that these last two stocks may continue to underperform if the rally continues. There is some logic in that argument, but since both are large cap names without serious issues, as idle cash pours into the equities, these should rise with the general level of the overall market.

Final Thoughts
It's not too late for investors to get in on the rally, as many large cap stocks have underperformed. While some of these deservedly have lagged the market, several others might provide an opportunity for investors.

Read Buy When There's Blood In The Streets to learn how contrarian investors find value in the worst market conditions.

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