This column was originally published on RealMoney on Dec. 1 at 7:01 a.m. EST. It's being republished as a bonus for TheStreet.com readers.

The first two installments of my Top 10 Turnarounds list, posted at the end of

2000 and

2001, were full of good stock ideas. Between the two columns, there were eight multi-bagger ideas, three companies that were acquired at healthy premiums and only two ideas that lagged the

S&P 500

.

Unlike the first two lists, though, this one is unlikely to have nine of its Top 10 Turnarounds outperform. That's because the competition, the S&P 500 index, is much more attractively priced. But while the relative performance may not be as good with the current list of turnarounds, I believe it has the most long-term upside potential of the three lists.

In this, the first of a two-part column, I'll highlight five of the Top 10 Turnarounds for 2006. Look for part two this time next week.

Molson Coors

Since the No. 1 Canadian brewer, Molson, and Adolph Coors merged early this year, the new stock,

Molson Coors

(TAP) - Get Report

, has languished between $60 and $80 per share. Now trading at $66, this stock is very low-risk, with an impressive two- to three-year upside valuation potential of more than $100 per share.

The company is up against a difficult macro backdrop, with sluggish beer demand, but there are a lot of operational levers for management to pull to unlock value. Restructuring and right-sizing are going to be the name of the game over the next few years, as merger-related synergies are realized and cost-savings plans are implemented. There is a good chance that my valuation target will be too low, especially if current operating margins of 11.5% eventually are taken to 15%, a level that this operating structure can easily support.

DreamWorks Animation

Since trading in the low $40s after its IPO last year,

DreamWorks Animation

(DWA)

has taken a hit and now trades around $25 per share. My valuation target is in the mid-$40s by 2007. Even at a mid-$40s quote, the company would be valued at a significant discount to key competitor

Pixar

( PIXR).

Besides a strong balance sheet with no debt and a hoard of cash, the store of value in DreamWorks resides in a growing base of valuable content franchises, including

Shrek

,

Madagascar

,

Antz

and

Shark Tale

. The company's next big film year should be 2007, with Jerry Seinfeld's

Bee Movie

and

Shrek 3

due for release.

Pier 1 Imports

Wall Street's linear bias is fully operational for

Pier 1 Imports

(PIR) - Get Report

. Sales comparisons have been quite poor for more than a year. But very few retailers can operate with a high level of sales consistency for an extended period of time. Most are cyclical, with thin margins pinched during phases when they are out of sync with the consumer and large earnings upside when they get back in sync.

Expect Pier 1 to get it right in the near future, with an impressive turnaround off of this cycle low. This situation is analogous to other retailers that rebounded strongly after similar struggles, e.g.,

Gap

(GPS) - Get Report

,

Men's Wearhouse

(MW)

and

Payless ShoeSource

(PSS)

. The magnitude of the upside from these situations can be powerful. A price increase to the low $20s from the current quote of $12 is a reasonable expectation.

Eastman Kodak

This turnaround story appears complicated at first glance, but it's actually a fairly simple story to analyze. Forget

Eastman Kodak's

( EK) film business. The film business is not worth zero, but for purposes of this exercise, let's assume there is no value.

The enduring (and growing) digital businesses at Kodak and the commercial printing business will be operating at an $11 billion annual revenue run-rate by next year. Even if you discount the operating margin potential of these businesses, they still support a valuation in the high $30s. Currently trading around $24 per share, a 50% gain from here over the next couple of years should be a minimum expectation.

OfficeMax

OfficeMax's

(OMX)

current quote of $30 is much lower than my short-term valuation target of $45 per share. Operationally, this office products retailer has been struggling to turn around for several quarters.

Pressure is severe from major shareholders to make substantial changes and/or put part or all of the company up for sale. Time is running out for the current management team. Operational improvement has been unacceptably slow in coming. Profitability badly lags peer companies by a wide margin.

There is significant value here; the issue at hand is how and when it will be unlocked.

At time of publication, Alsin and/or ACM was long Molson Coors, DreamWorks Animation, Pier 1 Imports, Eastman Kodak and OfficeMax, although holdings can change at any time.

Arne Alsin is the founder and principal of Alsin Capital Management, an Oregon-based investment advisor, and portfolio manager of The Turnaround Fund, a no-load mutual fund. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Alsin appreciates your feedback;

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