These Dog Stocks Are Going Straight Up

Updated from 2:55 p.m. EDT

Sometimes stocks are so beaten-down that they only have one direction: up.

How does a stock get beaten down? Lets say a company is about to report bad earnings. The management team might decide: "Listen, we're going to get crushed anyway. Let's write down every number we can. Let's get all the bad news out there so our comps for the foreseeable future will be enormously positive."

The earnings come out, and the investors panic and hit the sell button. Then the selling feeds upon itself. The stock goes down 20% to 30% or more until there are no more shares left to sell.

So we have several things going for us all of a sudden:

1. 1. No more shares left for sale.
2. 2. The company lied. Things aren't so bad. In fact, things are going to be pretty darn good for the next few quarters because the stock took the massive hit already.

Here are my two favorite stocks that are back doors on wind power: To read the rest of the story and for the four losers that I think got beaten too badly and are on their way up, please click here.

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A note from James Altucher:

Every weekend I send an email to Jim Cramer and several hedge fund managers about the most interesting portfolios posted on Stockpickr that week. Usually those portfolios not only list stocks according to a theme but also offer significant analysis as to why the stocks are cheap.

Here are some examples:

• Stocks related to drilling the Marcellus Shale

• MLPS with yields above 7%

• Microcaps trading for less than tangible book

• Stocks that do well after Hurricanes

Here's the challenge: Build a portfolio at Stockpickr.com with great analysis, and send me the link. Each great portfolio (with analysis) will get posted on TheStreet.com with your byline (as a "Stockpickr Guest Columnist") and will be included in my email I send to Jim and the other hedge fund managers on my list.