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As investors gather for the holidays, they can be thankful to corporate America this year for delivering a bounty of golden turkeys to consider for their 2005 dining pleasure.

Some of the worst stocks of one year, my research shows, do very well in the following year as inept managers are dismissed and botched strategies are abandoned. And because these stocks are surrounded by a thick fog of distaste and skepticism, there is usually plenty of time for risk-taking traders to take advantage of their recoveries early on.

How can you tell the difference between the turkeys that will find their wings and fly and the ones bound to remain firmly on the ground?

It isn't easy. Very often it's only at the moment of maximum pain that boards of directors finally face up to their failure. Those moments are sometimes a crucible for future success, but they are excessively investment-repellent at the same time. In other words, stocks are often at their best when they look their worst.

The Texas-based utility

TXU

( TXU), one of the year's top-performing stocks, saw its fortunes turn around in mid-October 2002. It happened a few days after the company slashed its dividend and announced it would trail analysts' estimates for fiscal 2002 and 2003.

Who would want to buy on a day like that? In the 45 days from Sept. 1, 2002 to that mea culpa on Oct. 15, 2002, TXU shares had fallen 74%. The company appeared to be on the ropes.

Since then, TXU is up 472%; the

S&P 500

has gained 33% in the same stretch. It has gained far more than such glamour stocks as

Starbucks

(SBUX) - Get Report

, which is 150% higher, and

eBay

(EBAY) - Get Report

, up 242%.

Of course, not all one-time disasters turn out so well. Southeastern grocer

Winn-Dixie Stores

(WIN) - Get Report

, the smallest stock in the S&P 500 these days, sank 45% in 1999, 15% in 2000, 23% in 2001, had a brief 8% recovery in 2002, then plunged another 34% in 2003 and 60% so far this year.

The company announced it would restructure in April, and many value buyers have said that its real estate is worth a ton by itself. But this employer of 90,000 people just can't seem to find a way to match up against

Wal-Mart

(WMT) - Get Report

.

With comparable-store sales down quarter after quarter, drastic action must be taken eventually. So keep an eye out over the next 12 months for the sort of extreme event that could finally catalyze a long-sought up cycle for Winn-Dixie.

My guess is that it will get kicked out of the S&P 500 in 2005 amid rumors of imminent bankruptcy. The stock would probably rebound soon after the ensuing washout -- if bankruptcy is ultimately avoided and a realistically drastic restructuring plan is put in place.

Can Merck or Marsh & McLennan Take Flight Again?

The most obvious grounded big-caps with potential to fly in 2005 are drugmaker

Merck

(MRK) - Get Report

and insurance broker

Marsh & McLennan

(MMC) - Get Report

.

Both have undergone the extreme wipeout required of potential turnaround stories. Merck experienced the recall of its flawed analgesic Vioxx, and Marsh had those accusations from the New York Attorney General Eliot Spitzer that its commission structure had violated state fraud laws. Each now sports a whopping 5% dividend yield. Yet only Marsh appears to have faced its mistakes with any candor. In contrast, Merck still mostly protests that it has done nothing wrong.

Of the two, my model suggests that Marsh has more recovery potential. But after having its corporate credibility questioned, it's still unclear how its vilified special-commission income will be replaced and whether customer and federal lawsuits will dog it for months to come.

In other words, count me as too chicken to buy into either of these turkeys yet. Instead, I would propose taking a somewhat conservative approach to year-over-year turnarounds and consider the worst-performing stocks in the S&P 500 with the best MSN Money StockScouter scores. Here they are:

All of these are down at least 10% for the year, or a minimum of 15 percentage points worse than the S&P 500 itself. Yet all are rated 8, 9 or 10 by StockScouter, which means the stock-rating system considers them good bets to outperform the market over the next six months. Most are up substantially in the past month after the election relief rally.

The whole list will probably outduel the broad market over the next six months, but the real sport is in picking a couple that will lead the pack. The first three look terrific from a technical perspective.

KLA-Tencor

(KLAC) - Get Report

has just crossed up over long-term resistance to make a new recovery high on the strength of a very strong first-quarter earnings report.

Siebel Systems

( SEBL) is also muscling up above resistance, as is

QLogic

(QLGC)

. The next nine names on the list are struggling, so while they might work out over the next six months, their near-term prospects are limited.

Pick an M

Perhaps the most interesting stock on the list, however, is

Maxim Integrated

(MXIM) - Get Report

. The price is currently the same as it was in late 2002 during the middle of the second down wave in chip sales.

Maxim, one of the blue-chip semiconductor makers, appears to be under accumulation as investors are biding their time while inventory is worked down at customer warehouses across the world. In the next up cycle, which could start as soon as the second quarter of next year, analog chip makers should do very well. And I think Maxim, whose products are used in everything from wireless handsets to automotive and medical devices, will be a leader again.

Cash flow, revenue and earnings growth are all outstanding, and the valuation is not outrageous. Furthermore, Maxim is one of the few technology stocks that have advanced in all but one of the past 10 calendar years. (It sank 37% in 2002.) It is on track to lose 10% this year, but if my fundamental and technical models are correct, Maxim has the potential to find its wings in 2005 and get to $60 by December of next year. That would be a 40% gain.

So here we have an interesting value-investing dilemma. Which of the following three Ms in health care, financial services or tech do you think will do best over the next 12 months: Merck, Marsh & McLennan or Maxim?

Email me your response along with your reasoning, and I'll publish the best answers in a future column. Put MMM in the subject field.

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, Markman was long Autodesk and Starbucks. 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.