Get Ready for the Bounce: Nasdaq Edition

"Don't catch a falling knife," sayeth the sage. The idea of buying a former superstar stock at a discount price has its attractions, but you need to make sure you catch the haft -- not the blade.

For the second time today, we're upending Mr. Market's kitchen drawers and watching the knives tumble. We've already sifted through the silverware on the NYSE. Now it's time to take a stab (pardon the pun) at bargain hunting on the Nazz. As always, our guides in this endeavor are twain -- we start with the latest "New 52-Week Lows" list at MSN Money, and then we crunch the numbers on investor sentiment at Motley Fool CAPS:

Stock

52-Week High

Recent Price

CAPS Rating (5 Max):

Omniture  (Nasdaq: OMTR  )

$38.57

$15.52

****

Garmin (Nasdaq: GRMN  )

$125.68

$28.72

****

ValueClick   (Nasdaq: VCLK  )

$29.97

$8.95

****

Sonus Networks (Nasdaq: SONS  )

$7.59

$2.24

***

Electronic Arts  (Nasdaq: ERTS  )

$61.62

$32.68

***

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

Knives and knaves
By the close of trading Friday, 346 stocks on the Nasdaq had hit their 52-week lows. That's roughly one stock in nine, people. The NYSE fared even worse -- 406 listings hit bottom, one out of every seven. Ugh.

If the carnage on the markets has you thinking the sky is falling, well, I can't blame you. It's ugly out there. But here's the good news: I've been running some numbers on the market's biggest losers, in an attempt to discover a few potential winners in case the world somehow avoids coming to an end. And guess what, Fools? I think we're in a turkey shoot.

Despite narrowing our field of view to just the Nasdaq, and just the 52-week-lows thereon, we've come up with three highly rated stocks to choose from. Best loved by CAPS investors -- and a Motley Fool Stock Advisor pick to boot -- is Internet analytics specialist Omniture. Here's why Fools love it:

The bull case for Omniture
Making a bold call back in June, leapgiant predicted that "sector leadership makes [Omniture] a top target for takeover by giant techs like [Microsoft, Yahoo!, or Google (Nasdaq: GOOG  ) ]."

One of the great things about CAPS is that with 115,000-plus investors, we're bound to have a few contributors who have experience with the companies they recommend. As bclapp21 told us:

My wife's company is one of the many subscribers and she uses their data and research everyday ... she always says "the product is incredible, but complex ... once you have integrated it in your business it's almost impossible to migrate away from." (Hence the 95% re-subscription rate). Her company has researched other options and always comes to the [conclusion that Omniture's] products -- while expensive -- are cost effective and that the alternatives out there would woefully underdeliver on [the company's] needs. ... Diversification, Huge client list, sticky product...these guys are positioned properly but it will take some time.

Speaking of Google, much has been said of late about how the Internet giant's free product poses a threat to Omniture's. But chcarlson, who wrote in June, begs to differ: "They [Omniture] are THE analytics tool for web businesses, and are focusing on large enterprise clients who are not likely to use free tools such as Google Analytics because of a need to keep their stats private."

Sounds logical. And a Fool can't help wondering whether that had something to do with the deal that took place in secrecy-obsessed China earlier this year, when Baidu.com (Nasdaq: BIDU  ) chose Omniture over Google to do its analytics.

I've been interested in Omniture for a long time, but I haven't pulled the trigger because of the lack of profits. Historically, Omniture has reported net losses under GAAP, and negative free cash flow. Without those two items, it didn't matter to me how quickly the company was growing.

Or does it?
Omniture may finally be turning a corner. Now that it has successfully generated positive free cash flow in four of its past six reported quarters, maybe net profit under GAAP won't be too far behind. When we get to that point, Wall Street may sit up and take notice of Omniture ... just as the Fools out in CAPS-land already have.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Omniture -- or even what other CAPS players are saying. We want to hear your thoughts. Head on over to Motley Fool CAPS, and tell us what you think.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

On Oct. 7, 2008, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Fool contributor Rich Smith owns no shares of any company named above. Garmin is a Motley Fool Global Gains recommendation. Microsoft is an Inside Value selection. Google and Baidu.com are Rule Breakers recommendations. Omniture, Garmin, and Electronic Arts are all Stock Advisor recommendations. You can find him on CAPS, pontificating under the handle TMFDitty, where he's ranked No. 1,526 out of more than 115,000 players. The Fool has a disclosure policy.


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