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 haft, not 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 the 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 Nasdaq.com:

If there's one good thing about a broad-based market sell-off, it's that you find a lot of terrific companies getting the baby 'n' bathwater treatment, tossed out on their rosy little bums as if they were bums of another sort. You know -- just know -- that some of these babies are gonna bounce right back once the suds subside.

How long will it take? No one knows. But as we're already well into the latest market downturn, it can't hurt to start sifting through the wreckage. Maybe we'll find something worth buying today -- maybe just a few ideas we can revisit if the stocks get cheaper still. Either way, today's choice is made easy by the presence of only two above-average-rated stocks on the list. Even better, this company bears the stamp of approval of The Motley Fool's dividend-investing newsletter service, Motley Fool Income Investor.

So without further ado, ladies, and gentle-Fools, let's review ...

The bull case for Johnson & Johnson
With more than 4,600 ratings to its name, Johnson & Johnson is the fourth-most-rated stock in all of CAPS-land. A full 95% of All-Star investors polled think the company will outperform the S&P 500 going forward, and more than 900 Fools have chimed in with substantive "pitches" on why they think that is. Here are a few culled from the ranks of our very best investors, the CAPS All-Stars:

• hlacheen leads off: "JNJ has been a strong and consistent performer for years, and I believe it has overcome the issues that took its share price down to the mid 50's earlier this year [2006]. With its recent purchase of Pfizer's consumer health care business, I have a lot of faith in Johnson & Johnson's potential, and I see the company easily beating the market over the long term."
  
• In a 10-month-old pitch that could easily have been written yesterday -- and, in fact, given recent events, perhaps it should have been written yesterday -- dymaxian opines: "People buy health care stuff no matter what the economy is doing -- especially baby stuff. When your kid is teething and keeping you up all night, you don't look at what the DOW is doing."
  
• In conclusion, the Fool's own man for all seasons, TMFOrangeblood, ends with some advice for all seasons: "Buy world-class consumer goods companies, reinvest the dividends, and then wait 30 years. Sounds boring, but that's a simplified version of Jeremy Siegel's advice for long-term wealth. JNJ is among the best of the best, and will anchor my portfolio for decades."

Stock market sage that he is, Jeremy Siegel isn't quite a household name. So perhaps you'd like some feedback from someone who is both a sage and a household name? Then consider that Warren Buffett himself has been growing his stake in Johnson & Johnson. The Fool's own TMFMurph recently crunched the numbers and concluded that the Oracle of Omaha was buying shares in the $58.59-per-share range. With Johnson & Johnson now down to just pennies above that price, you might consider doing the same.

Time to chime in
Convinced yet? Or still worried that J&J has further to fall? Whichever way you lean on the issue, make sure to stop by Motley Fool CAPS and tell us what you think.

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 ranked No. 759 out of more than 60,000 raters. Select Comfort is a Motley Fool Hidden Gems recommendation. CNET Networks is a Rule Breakers selection. The Fool has a disclosure policy.