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 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:

A rising tide lifts all rocks
Thanks to a rebounding market, we're fresh out of diamonds in the rough this week, folks. It seems that even the worst of stocks rebounded somewhat last week, leaving us with exceedingly slim pickings. Out of the 50 companies profiled on MSN's list, just three are both big enough to make it on the CAPS scoreboard, and new to this column.

Of course, we found several returning "champions" of underachievement this week, names both familiar (Sirius Satellite Radio) and perhaps less so (Staktek (NASDAQ:STAK) and Convera (NASDAQ:CNVR)). All three, incidentally, are looking particularly un-bounce-worthy, since their stocks trade lower today than when they first appeared on the list.

Beggars can't be choosers
But we'll make do with what we've got. And what we've got is, pretty much by default, a heavily shorted little number by the name of AtheroGenics -- the only stock out of our three finalists to sport any CAPS rating at all. Let's see what those Fools who have rated it have to say about this bottom-dwelling biotech.

Reviewing the 20-odd pitches already posted on CAPS, it seems this stock had a promising drug in phase 3 FDA trials, designed to treat or prevent coronary plaque formation -- a promising drug that nonetheless failed. When the news broke, the stock promptly cratered a few days back. Can it recover?

• CAPS all-star bbmaven, writing before the bad news broke, saw AtheroGenics going to "either $6 or $35 by the middle of the spring." At less than $4 a share today, perhaps that means it's oversold?
• Quite the contrary, declares fellow all-star PopsDaniecki, who thinks AtheroGenics is: "Going down on the failure of last week's trial announcement.... Down to a $1, maybe lower. OR until astrazeneca makes up its mind on the continuation of the partnership (I'm betting ... NOT!)"

Not all hope is lost. According to my Foolish colleague, Brian Lawler, "More data on the AGI-1067 phase 3 study will be revealed during the American College of Cardiology meeting on March 27. If this meeting reveals some strong positive trends with the drug's use in some patient subpopulations, then there may still be hope for AGI-1067 -- but any further development of the drug will require years of study."

In other words, we should know in less than 24 hours whether there's still a future for AtheroGenics' most famous asset. If you want to pontificate on the possibilities before they turn from future to present tense, you don't have a lot of time to act. Head over the CAPS now and place your bets -- will AtheroGenics bounce on tomorrow's news, or suffer another heart attack of its own?

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

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 60 out of nearly 25,000 raters. The Fool has a disclosure policy.