Get Ready for the Bounce

"Don't catch a falling knife." Thus commandeth the old saw (to mix a cutlery metaphor.)

But if people weren't tempted to catch cutlery in the first place, there'd be no need for this little bit of investing wisdom, would there? The idea of buying a former highflier at a discount price certainly has its attractions. The trick, of course, is to increase the odds that when you make your grab, you're catching the shaft, not the blade. That's where we come in.

In The Motley Fool's continuing effort to keep your investing dollars safe, today we once again assume our position beneath Mr. Market's silverware drawer. As the knives plummet, we'll measure who's fallen farthest. Then we'll head over to Motley Fool CAPS and ask which of these stocks Foolish investors think are ready to rebound to new highs -- if any.

With that said, let's meet today's list of contenders, drawn from the latest "52-week lows list" at MSN Money:

Companies are selected from the "New 52-Week Lows" list published on MSN Money on the Saturday following close of trading last week. 52-week high and current pricing provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Knives and knaves
As you can see, our fellow investors over on CAPS aren't terribly enamored of this lot. The vast majority of the stocks on MSN's "shot" list don't even have CAPS ratings, because they're too small and too illiquid to merit inclusion in our service. And of those that did make the initial cut, 80% receive below average ratings of only one or two stars.

Ready to bounce?
That said, we do find one possible superstar in the making -- a company that sells its wares to telco giants the like of Verizon (NYSE:VZ) and Sprint Nextel (NYSE:S). According to the collective wisdom of the 33 investors who've rated the stock, telecom equipment maker Ditech Networks (motto: "For the last time, no, we do not sell mortgages!") has fallen so far it's got nowhere left to go but up. As of this writing, Foolish investors by a 10-to-1 margin favor Ditech to beat the S&P.

Why?

• All-star investor 301002176 likes Ditech for its cash-rich balance sheet ($131 million of the firm's $212 million-market cap is made up of cash).
• Business-wise, Zahrim points out that the "company's main product is making its way into more cell phones every day, and that's a renewable resource if I ever saw one."
• As for why Ditech is down in the first place, spinbob7 explains that: "This company's revenue dropped due to the loss of a big customer and due to the increasing irrelevance of its echo cancellers," soothsaying "Look for it to regain its growth story with VoIP."

Are they right? Are they wrong? Tell us what you think on Motley Fool CAPS. So far, not a single all-star rater thinks Ditech will underperform the S&P from its current price. Maybe you can be the first.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 148 of 19,500 raters.