At a time when valuations of big tech companies are soaring and capital has been concentrated into a few of the largest names, investors seeking extraordinary value plays should look where others are afraid to go, according to one Wall Street veteran. 

George Putnam, editor of investment advisory service The Turnaround Letter, recommends buying beaten-down stocks that shared a handful of attributes he views as positioning them up for a comeback, as outlined in a MarketWatch report. His picks include Blue Apron Holdings Inc. (APRN), AMC Entertainment Holdings Inc. (AMC), Newell Brands Inc. (NWL), Hovnanian Enterprises Inc.(HOV) and Midstates Petroleum Co Inc. (MPO). (See also: 6 Small Tech Stocks That May Pay Off Big.)

Putnam's service has outperformed the stock market over the recent decades. If one invested $100,000 in his average portfolio at the beginning of 1988, it would now be worth $3.8 million, compared to $2.1 million for the Wilshire 5000 index, as noted by MarketWatch. In annualized terms the gains are equal to 12.7% and 10.6%, respectively. 

Targeting Fundamentals 

Over his decades of experience advising on stock picks, Putnam told MarketWatch that it's much easier to target when to buy equities than when to sell them. He focuses on stocks of companies that are turning around from a prolonged period of underperformance, indicating that investors are often unwilling to look past the poor performance to fundamentals

"While much of the stock market is quite efficient, there are inefficient niches where you can earn outsized returns, and I still believe that turnaround stocks represent such a niche,” said Putnam. 

Putnam's typical "turnaround investing" pick is a company with a solid core business, a good brand or franchise, "a healthy enough balance sheet to give the company enough time to fix its problems," new management, and a solid dividend yield to "compensate you while you wait for the turnaround to take hold." (See also: 7 High Return Stocks for Your Portfolio.)