NEW YORK (Stockpickr) -- There are companies that stumble, and then there are companies that fall completely out of bed, falling so far short of what investors had been expecting that their stocks get decimated. We're not talking about a 25% or 50% drop from recent highs but 75% or even 85%.

In many instances, the problems that led to the massive stock price plunge are so deep that it will be a number of years before the company can get back on track. Yet some of these companies can put together a sound game plan that will re-build profits -- and the stock price -- in a much quicker fashion.

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Here's a look at

three stocks that have traded down

more than 75% from the

52-week high

but could post solid rebounds in 2012.

Central European Distribution

Central European Distribution

( CEDC) was a $70 stock back in 2008 but can now be had for under $4. Back then, investors saw this as a perfect vehicle for investing in Eastern Europe's consumer preference for liquor. Rising disposable incomes meant surging demand for the company's premium spirits. Management became enamored of the region's potential growth and embarked on a debt-fueled spending spree that set the stage for an eventual $1 billion in annual revenue but also parked more than $1 billion in debt on the balance sheet.

That turned out to be a recipe for disaster: Russian regulators temporarily closed some of the company's facilities in a spat over licensing; the regional economy cooled, dampening demand; and raw material costs (for items like grains) soared. In a tacit admission that the company overpaid on many of its deals, CEDC just took a massive $674 million asset write-down that spooked lenders.

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Yet beyond all that noise, there remains a healthy underlying business. In the first nine months of 2011, CEDC still managed to generate $46 million in operating cash flow (despite tough industry conditions). Guidance for the current quarter implies decent EBITDA margins on about $250 million in sales. In effect, business stinks, but it's not terminally broken.

Meanwhile, rumors swirl that several Eastern European investors would like to buy some or all of the business. With the stock falling sharply in recent weeks, the company's board has to guard against any moves made at fire-sale prices, but it's increasingly clear that CEDC possesses coveted spirits brands in a region that is still poised for long-term economic development. And shares now trade at just 20% of book value. Merrill Lynch, which has been consistently bearish on the company's prospects, still maintains a $5.50 target price, which is nearly 60% above the current share price.


It's been a slow road to ruin for women's apparel retailer



. Shares have fallen from $25 in 2007 to $16 in 2010 all the way to a recent $2.50. At the current prices, the vultures are circling. The steady demise is the result of a series of merchandising missteps that sought to attract younger buyers. The fashion changes have been axed, and the current line-up of clothes reflects a return to more traditional roots. Still, the damage to the brand is done, and it will be a while before customers flock back to the stores in high numbers.

Acknowledging the new harsher reality, Talbots is closing more than 100 of its worst-performing stores (out of a current 580), while also expanding a set of revamped stores that evoke a French-couture environment.

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Before any of this can happen, private-equity investors are circling while shares are so cheap. In early August, Sycamore Partners announced it had amassed a 9.9% stake in Talbots, with plans to discuss steps to unlock the stock's value with management. The stock temporarily rebounded $4 before pulling back again. That pullback may be due to a "poison pill" provision that makes it harder for anyone to pull off a hostile takeover. At this point, it's not clear if an outright sale will take place, or management simply stays the course and rebuilds the tattered reputation.

How cheap is this stock? Talbots earned nearly $2 a share every year back in the first half of the last decade. Assume peak earnings power will only rebound to half that level, and this still trades for less than three times potential profits.

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The key to owing retail stocks is finding business models that have stumbled that aren't broken.

Pier One Imports

(PIR) - Get Report

struggled mightily in 2008, and its shares fell to 10 cents in early 2009 before management implemented a back-to-basics turnaround strategy. Shares have rebounded all the way to $13. Teen-focused retailer



saw its shares plunge below $10 in September, but a modest upturn in business trends has quickly boosted the stock back to $17. It's still unclear if Talbots will experience a similar renaissance, but the potential upside for these turnaround retail plays is simply too large to ignore.



(NPTN) - Get Report

came public in February 2011 at $14 a share, soon moved above the $20 mark, but now trades for less than $4. How cheap is this stock? The company's $96 million market value is just $4 million more than the net cash on the balance sheet? Is this company's technology platform worth just $4 million? Not hardly.

Neophotonics makes optical networking gear used in telecom equipment. It's been a challenged industry as many rivals built too many products, leading to a product glut, right at a time when key buyers decide to hold off placing more orders to reduce their own inventories. Adding insult, Neophotonics derives more than 40% of sales from just one customer -- China's Huawei -- and orders from that company have slowed as well. Neophotonics revenue base, which hit $184 million 2010, is unlikely to exceed $200 million in 2011 or 2012.

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Yet longer-term , improving industry demand should help this company to get back on its feet. Analysts think sales can exceed $230 million by 2013, setting the stage for a move back into positive EBITDA and EPS. For now, investors can take solace in that strong cash cushion and hold this deep value play until sentiment starts to rebound for this broken IPO.

To see these stocks in action, check out

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on Stockpickr.


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At the time of publication, author had no positions in stocks mentioned.

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