"Don't catch a falling knife," as the old saw commands. (Pardon my mixing a cutlery metaphor.) The idea of buying a former superstar stock at a discount price certainly has its attractions, but you've got to make sure you catch the haft -- not the blade. That's where Motley Fool CAPS comes in.

Today, we once again stand beneath Mr. Market's silverware drawer, measuring which knives have fallen the farthest. Then we'll call on CAPS to ask which of these stocks -- if any -- Foolish investors believe are ready for a rebound. Let's meet today's list of contenders, drawn from the latest "52-Week Lows" list at WSJ.com:

Company

 

52-Week High

Recent Price

CAPS Rating

(out of 5)

Constellation Energy Group (NYSE: CEG)

$38.73

$28.90

*****

Allos Therapeutics (NYSE: ALTH)

$8.79

$4.17

****

A123 Systems (Nasdaq: AONE)

$28.20

$6.99

***

BB&T (NYSE: BBT)

$35.72

$23.11

***

Bank of America

$19.86

$12.87

***

Companies are selected from the "New Highs & Lows" lists published on WSJ.com on Friday last week. 52-week high, recent price, and CAPS ratings from Motley Fool CAPS.

It was a funny week on Wall Street -- and when I say "funny," I mean heartburn-inducing. Sure, some stocks declined for a reason. For example, on Wednesday, a report out of Fitch Ratings named Bank of America as one-of-four big bankers who could be forced to buy back as much as $42 billion worth of bad mortgage loans from government mortgage clearinghouses Fannie Mae and Freddie Mac. That news undoubtedly helped push B of A's stock down Thursday and Friday, depressing it to a 52-week low.

On the other hand, BB&T's stock hit a similar low last week, yet Fitch said nothing about whether it faced similar risk. Nor was there any particularly bad news of note on battery maker A123 Systems. Or Allos Therapeutics. Or Constellation Energy. Fact is, sometimes declines like these just don't make sense. Sometimes, the markets just have a bad week...

… and that can be great news for investors because "bad weeks" can yield good stock prices. And this week, CAPS members see the bargain basement pricing of Constellation Energy as one of the best deals out there.

The bull case for Constellation Energy
Why? CAPS All-Star moneyrocket explains:

CEG is [one of] the 3 largest integrated power generation utility in the country. The industry leader is [Exelon (NYSE: EXC)] which happens to be my favorite company in this industry. They have the best cost profile and best safety record that all other players are judged. unfortunately Excelon is not cheap nor a value play. But CEG however is an interesting opportunity. … CEG's power is generated mainly from gas and coal which accounts for 58.8% of their generating capacity followed by nuclear at 30%, Hydro electric at 3.3% and the remainder from the renewable sources. Their business is broken into 3 main segments: Merchant energy (crown jewels), Regulated Electric and Regulated Gas.

OK … But what is it that makes Constellation's stock such an "interesting opportunity"? CAPS investor Dlscwby gives us three suggestions: "High ROE, high profit margin, low price to book."

And dividend investors will be pleased to hear that CAPS All-Star Clint35 likes the company's 3.2% dividend yield, thinks the company's got a "pretty good balance sheet" to support it, and income enough that: "[t]he dividend is more than covered."

Um, I think you forgot something…
You mean the company's price-to-earnings ratio? Well, yes, you can forget about that. While I'm sure that a P/E of 1.2 will attract some investors, Fool readers at least will beware that numbers like that one are simply too good to be true. In Constellation's case, the reason the P/E is so low derives from the fact that in Q4 last year, the company sold a 50% interest in its nuclear operations to Electricite de France (which outbid Warren Buffett's Berkshire Hathaway (NYSE: BRK-B) to win the prize.) The resulting multi-billion dollar "gain on sale of assets" consequently distorted the profits picture for the trailing-12-month term.

Looking forward, however, we should be able to see things a bit more clearly, and a quick glance at forward earnings estimates show us that even without a repeat French bailout, Constellation should earn enough to hold its forward P/E below 9. Plus, while the company doesn't pay as rich a dividend yield as some other utilities -- moneyrocket's preferred Exelon pays 5.1%, while Duke (NYSE: DUK) writes a 5.7% dividend check to shareholders every year -- Constellation's near-10% projected long-term growth rate means that even its 3.2% dividend should be more than enough to reward investors richly.

Foolish final thought
Market downturns aren't for the meek of heart, but last week's disaster does appear to offer investors a rare opportunity to own a powerful income producer at a price that's more than nice. So, take a look at Constellation Energy. Then, if you agree with me (or even if you don't), take a moment to drop by Motley Fool CAPS and tell us what you think of it.

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 No. 530 out of more than 165,000 members. Berkshire Hathaway and Exelon are Motley Fool Inside Value selections. Berkshire Hathaway is a Motley Fool Stock Advisor recommendation. Duke Energy is a Motley Fool Income Investor recommendation. The Fool owns shares of Berkshire Hathaway and Exelon. The Fool has a disclosure policy.