4 Loser Stocks Poised for a Comeback in 2013

NEW YORK ( Stockpickr) -- Despite a few spend bumps along the way, the S&P 500 managed to grind out another double-digit gain in 2012.

Of course, not all stocks joined in on the upside. In fact, there were 45 stocks scattered over the S&P 500, S&P 400 (mid-caps) and S&P 60 (small-caps) that plunged by more than 40% over the past year.

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Many of those falling knives will stay down, which is why you shouldn't try to catch them. But the investing landscape is also filled with stocks that fell deeply out of favor in one year, only to rally sharply in the next year. Netflix ( NFLX), for example, plunged from $300 in the spring of 2011 to below $60 by the summer of 2012 but is now back up above $170. The huge gain over the past six months wasn't anticipated by the crowd that simply saw a losing stock chart.

Here are four more stocks with solid rebound potential in 2013.

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Diamond Foods

Diamond Foods ( DMND), the packaged food company behind Kettle Brand chips, Emerald nuts, Pop Secret popcorn and other items, has been on a losing streak that began 16 months ago. Shares moved above $90 back then but now trade below $16.

What went wrong? A botched acquisition of the Pringles brand potato chips, fraudulent dealings with walnut growers, a complete turnover of management, and a last-minute capital infusion that boosted the share count were just some of the factors.

All of those issues are now behind Diamond Foods, but shares have failed to rebound as recent quarterly results remain messy. New management continues to sort out the final details of the mess that they inherited. More than likely, the new management team will look to sell off one of those brands to raise cash.

On a sum-of-the-parts basis, analysts at D.A. Davidson think shares are worth at least $20 a share, which is more than 40% above current levels. This stock will never revisit the heights seen back in 2011, but better days appear to lie ahead.

J.C. Penney

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