Editor's Note: Arne Alsin's column runs exclusively on RealMoney.com; this is a special free look at his column. For a free trial subscription to RealMoney.com, click here. This article was published Dec. 27 on RealMoney.

I solicited suggestions for the

Top 10 Turnaround list for 2002 several weeks ago. I got swamped with more than 800 different ideas.

So now that my Top 10 Turnaround list is in place, I want to review some of the best ideas submitted by readers -- the near misses -- companies that were seriously considered for the list but did not quite measure up.

I'm sure there are some big winners listed below. I am actively monitoring several of these companies and may purchase a few of them.

The Limited

The stock of the

Limited

(LTD)

, a leading retailer with the Limited, Express and Victoria's Secret franchises, is worth watching next year. September would have been a great time to initiate a position. But the stock rebounded too quickly, beyond my price point, so it was not included in the Top 10 Turnarounds.

Humana

A leading HMO,

Humana

(HUM) - Get Report

, is on my watch list. Restructuring improvements have been ongoing for more than a year, and the benefits are beginning to materialize. At about $11 a share, the stock is coming off a nice run since its mid-2000 trough of about $5. I'm expecting additional margin improvement over the next couple of years, with upside in the stock reaching the mid to high teens.

La-Z-Boy

This furniture manufacturer/retailer has a great franchise.

La-Z-Boy

(LZB) - Get Report

had a terrific operating record until it was deluged by a slew of problems early in 2001. With a strong financial position and plenty of catalysts for recovery, this stock looks like a winner at the current quote of about $21. While my price point is in the high teens, investors may want to take a look at La-Z-Boy. I expect the stock to appreciate to the high $20s in the next 12 months or so.

TRW

There are some attractive business segments at

TRW

(TRW)

in space, defense and even technology. I'm not going to soft-shoe the issue of earnings/accounting quality -- it stinks, as

I wrote here in October. To the extent the economy recovers, TRW has decent potential, but I have similar exposure in

Cummins

(CUM)

in my Top 10, sans the debt load and the accounting gimmickry.

CDI

At about $19 a share, up from a low of $11 and change in September, this staffing company has moved too far to justify taking a position.

CDI's

(CDI)

emphasis on the technology industry is also a negative, as I'm not convinced that all of the excess is wrung out of that sector yet. My valuation work suggests that

Manpower

(MAN) - Get Report

and

Spherion

(SFN)

are much better values.

PetsMart

Store reconfigurations and other operating changes at this leading pet- supplies retailer are having a positive effect on sales, which has helped the stock price rally. There may be more appreciation in this equity, but

PetsMart

(PETM)

already has tripled off the lows of early 2001. Put this one in the

it-got-away-from-me

category.

3Com

It's tough to justify a position in a company whose top line is down 58% year over year.

3Com's

(COMS)

net cash position makes the shares worth a look; however, poor industry fundamentals can drain a hefty cash balance rather quickly. The current net cash position is roughly 40% of year-end 2000 levels. This one is a roll of the dice -- as my readers know, the odds have to be stacked in my favor, or I won't play.

Instinet

Electronic securities brokerage is still a relatively immature industry. I like the business model at

Instinet

(INET)

-- the potential for large free-cash flow generation is enticing. Instinet's leading market share and healthy operating margins are not safe from competition, though. Capital continues to flow into this marketplace. I need better odds.

Winn-Dixie Stores

By my calculations, the $14 stock of this grocery chain will soon be nearly $30 a share if the current company overhaul is successful. But that's a big if. Recent sales performance at

Winn-Dixie

(WIN) - Get Report

has been awful, and the subinvestment-grade balance sheet raises the risk level substantially. The problem with investing in supermarket stocks is that the minuscule margins allow no room for error.

Quiksilver

Quiksilver

(ZQK)

is an apparel maker for teens. It has been hot for a few years now, though major problems in 2001 have caused the stock to drop dramatically. While its business model is very appealing, with strong free-cash flow growth, there is too much fashion risk here. The company constantly needs to guess right with a fashion-fickle consumer base.

Arne Alsin is the founder and principal of Alsin Capital Management, an Oregon-based investment advisor specializing in turnaround situations. At time of publication, Alsin and/or ACM was long Manpower and Spherion, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Alsin appreciates your feedback and invites you to send it to

arne@alsincapital.com.