MINNEAPOLIS ( Stockpickr) -- With the markets trading lower over the last six weeks, we are approaching the 10% lower mark defined to be a true market correction. The selling has spared few. In fact, many stocks are down substantially more than 10%.

As is typical of a market correction, there are plenty of companies with strong operating performance that are being caught in the downdraft. Contrarian investors can swoop in and buy these names at a discount. Soft patch in the economy or not, Wall Street expects these quality names to grow profits at a strong clip in the next year or two.

Related: 5 Stocks Setting Up to Break Out

In some cases, stocks that recently reported strong earnings reports have been sold aggressively. These are the names I would keep an eye on for future stock gains. If the soft patch is temporary, as the Federal Reserve recently stated, then these oversold stocks will bounce back.

Here are five duds that should be studs.

Take Two Interactive

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Gaming software company Take Two Interactive ( TTWO) has been hit hard by the recent selling in the stock market. Over the last six weeks, shares are down about 9% -- a surprising discount considering that the company significantly beat earnings estimates in its latest quarterly report.

Analysts were looking for a loss of 41 cents per share in the period ended March 31. The actual loss was 18 cents per share. For the fiscal year ending March 2012, the company guided for earnings of 10 cents to 35 cents a share, compared with Wall Street's estimates for $1.12 a share.

Interestingly, the market's initial reaction to the news was to send shares higher. Ultimately, though, the missed guidance for 2012 took the spotlight, and shares have been lower since the release of the report in late May. I get the confusion, but I think the market has it wrong here.

In addition to the poor guidance for 2012, Take Two said it would earn $2 per share in 2013. Put a 10 multiple on that $2 per share of earnings and you get a stock price of $20 per share. This is where investors should be focused on the long term.

If you bought shares today and waited six to12 months, the focus would likely be on the $2 estimate, and shares would trade accordingly. Buying today and holding for $20 per share would net a 35% return. That is not bad -- even if you have to wait a year or a bit more.

Take Two, one of the holdings of Carl Icahn, with a 9.8 million-share position, was highlighted recently in " 11 STocks That Could Soar Off Zynga's IPO."

Saks

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

One of the first assumptions of the doom and gloom crowd is that retail sales will suffer thanks to stubbornly high unemployment and the recent soft patch in the economy. The Federal Reserve is telling us that the soft patch will be temporary as the central bank prepares to end QE2. Who is right?

Last week we learned that retail sales fell in May. The good news was that the drop was less than expected. As a result, stocks that had sold off on fears of weakness rallied. For example, shares of Saks ( SKS) jumped by more than 3% in the day of trading after the sales report was released.

That move helped the stock recover some of the losses accrued since Saks released its earnings report for the quarter ended April 30. Even after the recent gains on Tuesday, Saks is down about 4% since that report on May 17.

Investors should expect more given the strong earnings report. Saks beat estimates in the period by a penny per share. From a valuation standpoint, the stock is attractive. Analysts are looking for the company to make 35 cents per share in the current fiscal year and 47 cents in the following year. You can buy that near 34% growth for 30 times current-year estimates.

One big bullish bet on Saks in the first quarter came from Westport Asset Management, which maintained a 1.1 million-share position in the stock.

Jakks Pacific

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

There are few guarantees in the market no matter your approach. One metric that I use that comes pretty close to being a guarantee is to buy stocks trading for multiples of earnings below expected growth rates. That is now the case with toy maker Jakks Pacific ( JAKK) thanks to a 12% decline in its stock price since it released earnings in late April.

Nothing in that report merits the excessive selling. The company posted a loss of 39 cents per share in the period ended March 31, matching Wall Street estimates. Revenue was actually higher than expected. The stock should have seen a boost in my opinion, but the stock could not overcome negative sentiment in the market.

The stronger-than-expected May retail sales number helped Jakks recover some lost ground, but the current price should be viewed as an opportunity for longer-term investors. For the current fiscal year ending in December, the company is expected to make $1.41 per share. Wall Street expects a 14% increase in 2012 to $1.61 per share.

Investors can buy that growth for less than 13 times earnings given the current price of $18 per share. As I mentioned, when I find a metric such as this the market eventually pushes shares higher. It's not failsafe, but it's close.

>>Practice your stock trading strategies and win cash in our stock game.

AK Steel

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

I can appreciate the concern regarding economic growth especially globally. All you hear about are attempts to slow China's growth, loan defaults by governments in Europe and massive debts in the U.S. No wonder steel (the engine of any economic growth story) stocks are struggling. AK Steel ( AKS) shares are down almost 13% since hitting a short-term top of $16.99 per share on April 27. Such selling is stunning considering the operating results of the company in the most recent quarter. For the period ended March 31, the company made a profit of 8 cents per share, compared with Wall Street expectations for a loss of a penny per share.

That is a significant beat. Clearly the current pricing of the stock is based on fear regarding the future. Thus far, that fear has not materialized in the form of analyst estimates. For the full year ending December 31, analysts expect AK Steel to make a profit of $1.23 per share. For the 2012 year, the estimate is for a profit of $1.71 per share.

Any time you can buy 40% growth or more for just 12 times current-year estimates, that has to be a good thing. The valuation is frankly too good to be true.

Look for this stock to recover lost ground in a short period of time. It won't take long with this one.

AK Steel shows up on a recent list of 10 Steel Stocks With Upside.

OmniVision Technologies

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

For those doubting the power of the handheld device and tablet computer revolution, I have news for you: The growth potential in these markets is larger than most expect. One of the beneficiaries of the movement is camera maker OmniVision Technologies ( OVTI), and any opportunity to acquire shares at a discount should be jumped on aggressively by investors.

A discount in share price is what we have today. Since the market turned south on April 27, OmniVision shares are down about 16%, creating a good buying opportunity. The play here is valuation.

Over the last year, OmniVision generated a profit of $2.47 per share. At current prices the company is trading for about 12 times trailing earnings. That is cheap for any growth company, and it's ridiculously cheap considering where this company is positioned. Even better is that analysts expect OmniVision to grow profits by 18% to $2.92 per share in the current fiscal year ending April 30, 2012.

On a forward basis, then, OmniVision trades for about 10 times current-year estimates. This one is a no brainer. Investors that are willing to be patient can buy 18% growth for just 10 times forward earnings. I would buy this stock in volume at these prices.

To see these stocks in action, check out the 5 Duds That Should Be Studs portfolio.

-- Written by Jamie Dlugosch in Minneapolis.

RELATED LINKS:



Follow Stockpickr on Twitter and become a fan on Facebook.

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

Jamie Dlugosch is a founder and contributor to MainStreet Investor and MainStreet Accredited Investor. Formerly, he was president and CEO of Al Frank Asset Management. He has contributed editorially to The Rational Investor, The Prudent Speculator, Penny Stock Winners and InvestorPlace Media.

If you liked this article you might like

Activision Blizzard Stock Could Jump 21% After Strong Earnings

Activision Blizzard Stock Could Jump 21% After Strong Earnings

GrubHub Is Surging as Food Delivery Heats Up

GrubHub Is Surging as Food Delivery Heats Up

Wall Street Volatility, Disney, Snap and Steve Wynn - 5 Things You Must Know

Wall Street Volatility, Disney, Snap and Steve Wynn - 5 Things You Must Know

Investors Are Trying to Figure Out the 'Powell Put'

Investors Are Trying to Figure Out the 'Powell Put'

It's a Flash Sale!: Cramer's 'Mad Money' Recap (Wednesday 1/31/18)

It's a Flash Sale!: Cramer's 'Mad Money' Recap (Wednesday 1/31/18)