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Like subterranean monsters awakened in a 1950s-era zombie movie, a remarkable number of somnambulant stocks have come to life in the past week. Whether it's the re-election of the president, the decline in oil prices or the spark of a strong jobs report,

Night of the Living Dead: They Walk on Wall Street

is now playing on a stock exchange near you.

Some of the moves in retail stocks last week were downright spooky.

  • Department-store chain Saks (SKS) basically hadn't moved in 10 years, other than a big blip in 1998. Then came the call to the undead. On Friday it jumped 12% in a single bound.
  • How about struggling grocery chains Winn-Dixie Stores (WIN) - Get Report and Wild Oats( OATS), both of which are down huge this year? They ate up 8% and 12% gains last week, with much of their movement coming on Friday.
  • Sears (S) - Get Report zoomed 31% after being discounted about that much for the year.

The arousal was far-reaching. Of the more than 1,200 stocks with market capitalizations greater than $100 million that were down for the year going into last week, about one-third rose more than 5% in the five days of election week. Half of those rose more than 10%.

Investors seem to have simply gotten a whiff of what President Bush is cooking up for his next term, and they couldn't wait to get started. High on the list, according to sources: a move to make the 15% tax rate on dividends and most capital gains permanent. That's down from as high as 39.6% in the 1990s, in case you've forgotten.

Which Stocks Will Jump Next?

This jump-start has the electrifying feel of autumn 2002, when stocks that had been designated for disaster by the bear market suddenly sprang to attention and ran for 15 months.

How can you identify more names that should rock before they get away? If the market continues to move up, one class of stocks that tends to do well in this environment are major-index constituents that have the lowest absolute price, the highest short interest and the worst record year to date. I have shown this effect several times -- most recently in early spring 2003, but even more emphatically in the early fall of 2002.

It works partly because investors with cash on the sidelines throw bags of money into exchange-traded funds representing the indices first and then worry about individual stock selection later. Thus every stock, from top to bottom, feels the love.

Once the cellar-dwellers get some mojo going, traders see all those low-priced names as momentum plays and start jamming them up. And as these stocks move up, short-sellers are forced to buy back shares -- generating a "short squeeze" that sends prices ever higher. Plus, of course, value players are buying the stocks anyway.

Explosive Mix

Real buying from value funds combined with momentum buying from traders and panic buying by retreating short-sellers make a concussive cocktail. In October 2002, a few days after the bottom of this decade's market, I noted that stocks under $5 in the

S&P 500

with those characteristics were likely to explode. And they did: My list of 14 has risen about 325% as a group since then.

Which stocks are on that list now, and what are their prospects? For my analysis of the S&P 500 then, I focused on stocks under $5. Now I need to lift the maximum price bar to $13. Here's the new list:

This is your typical roster of rascals -- companies surrounded by clouds of condemnation for misdeeds real and imagined. If they do move, bears will discover that many seemingly intransigent business issues will be erased by higher stock prices.

  • Take Winn-Dixie. Please! This was one of the leading grocery chains in the South for years, but it has been marginalized by the ridiculously low prices available at Wal-Mart (WMT) - Get Report. Rumors abound that it will need to file for bankruptcy protection. But it could still survive with a simple restructuring that includes the sale of several stores for their real estate value. That ploy put the kick in Kmart( KMRT) shares this year, and it seems to be inspiring Sears buyers as well. Winn-Dixie could easily be a $10-$12 stock in two to three years if a few things go right and investors revalue its price-to-sales multiple upward.
  • The same goes for Delta Air Lines (DAL) - Get Report. Lower energy prices are really all this airline needs to avoid bankruptcy protection and win concessions from its unions. It could get to $10 in a year.
  • Calpine (CPN) was once the darling of the new-age power world, with a dynamic plan to create a new generation of smaller electricity plants around the country. Calpine took on too much debt, however, and has been struggling for the past two years to sell assets and cut its interest payments. Recent earnings reports suggest it is on track, and lenders have shown no interest in pulling the plug. It can certainly get back to the $6-$8 range over the next two years if its restructuring plan works out, and it should.

Over on the

Nasdaq

, if you do a similar analysis for stocks with market capitalizations of at least $500 million, you come up with names like

Siliconware Precision Industries

(SPIL)

,

Amkor Technology

(AMKR) - Get Report

,

Align Technology

(ALGN) - Get Report

,

Wireless Facilities

( WFII),

Power-One

(PWER)

and

Lattice Semiconductor

(LSCC) - Get Report

. All are under water this year and have begun recoveries.

Of these, semiconductor capital-equipment maker Amkor looks especially interesting. The company has repeatedly lowered earnings estimates in the past year and disclosed an informal

Securities and Exchange Commission

probe into trading by insiders. It seems that sellers are washed out, though; the stock has stabilized at this level and is moving higher.

Insiders have been buying the stock all year, at much higher prices. In a decent recovery, the stock should certainly get to $7, but $10 is definitely in sight if the outlook for chip production only improves a little in the second half of next year.

Align Technology is another low-priced name that could have a nice recovery. Manufacturer and marketer of the popular Invisilign orthodontics system, it tumbled from its perch in the $22 area to a low of $8.85 last month after issuing an earnings report that wasn't up to analysts' expectations.

It has begun, however, to recover nicely. After its plunge last month, insiders bought $4.1 million worth of the stock at $9.50 to $10.50. A reasonable recovery should take the stock back to the $16-$18 area over the next two years.

All of these living dead are risky. So if you take one, beware of real danger. But if a broad recovery does materialize, their humbled but rejuvenated spirits will surprise a lot of skeptics.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Wild Oats Markets to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

Jon D. Markman is publisher of

StockTactics Advisor, an independent weekly investment newsletter, as well as senior strategist and portfolio manager at Pinnacle Investment Advisors. At the time of publication, he held no positions in any of the stocks mentioned in this article. While he cannot provide personalized investment advice or recommendations, he welcomes column critiques and comments at

jon.markman@gmail.com; please write COMMENT in the subject line.