Value investors always want to buy low and sell high, but it's incredibly difficult to buy a stock at the bottom and sell at its peak. A more rational approach would be to find stocks that have fallen out of favor with investors and that have shown early signs of a reversal coupled with limited additional downside risk. Below are five "bottom feeding" stocks that could be ready for a reversal.

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The stocks were chosen based on how far they've fallen from their 52 week high, ranging from negative 25% to 58%. From there, the stocks that showed a persistent uptrend in price over the trailing four weeks were selected. The resulting stocks are below:

Big Losses ... and Big Comebacks?
ULURU Inc (AMEX: ULU), a specialty pharmaceutical company, registered the most substantial punishment on our list - having fallen 58% from its 52-week high. However, in the past four weeks the shares have shown strength and resiliency, rising by about 5% in the midst of a falling market. And its three-month performance appears to confirm its short-term uptrend as it has risen 21% in that time period. In addition, ULURU's historical beta comes in at -0.22 which serves to balance the downside risk of a potential fall in the market.

Shares of Palm Inc (NASDAQ:PALM), the maker of the Palm Pre among other mobile devices, sold off to the tune of nearly 40% from its 52-week high. Fueled by a weaker 2010 outlook than analysts had expected, the stock sold off quickly. In the past four weeks the stocks started showing signs of turning around, with the stock climbing 8% return while two of Palm's major competitors - Apple and Research in Motion - both fell. Palm's beta is also low at 0.71.

Tech Resurgence
Global IT firm Satyam Computer Services (NYSE: SAY) has seen its share price sink 28% from its September 52-week high of $6.93. But the firm's share price has experienced a resurgence in the past four weeks, returning 8%. Investors may still be wary of investing in Satyam due to its prior accounting scandals, but with new management on board and solid fundamentals, this might be an excellent stock to keep on your. Notable financial ratios include an astoundingly low P/E ratio of 3.58, PEG ratio of 0.22 and a long-term debt-equity of 0.01.

Regaining Footing
Having spent a large part of 2009 fixing operational issues regarding contamination at one of its plants, Genzyme Corp (NASDAQ: GENZ) seems to have regained its footing and could be poised for a big leap. Shares of Genzyme are down 25% from its 52-week high of $73.75, but recent four-week performance pushed Genzyme shares up about 12%. The stock also has a low beta of 0.27, reducing investor's exposure to market risk.

Last on our list, shares of Corinthian Colleges (NASDAQ: COCO) are down 27% from its 52-week high but have rebounded by 6% in the past four weeks. Despite being out of favor with investors, the post-secondary education company has shown a record of solid growth and future growth potential. Corinthian's three-year annual EPS growth of 38% and its three-year annual revenue growth rate of 16% are above average.

Bottom Line
In order to buy low and sell high, value investors have to go against the grain and choose companies that are currently out of favor. This list is definitely a good starting point for further research. (Buying value stocks that are moving higher helps investors steer clear of value traps. For more information, check out Value Investing + Relative Strength = Higher Returns.)

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Tickers in this Article: ULU, PALM, SAY, GENZ, COCO

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