This article is part of our Rising Star Portfolios series.

Kanye West recently, and quite famously, tweeted that "Black is the new black." I found that profound, even metaphysical. I'm endeavoring similarly wild twists of mind and nature in my Rising Star Portfolio—by turning ugly stocks into beauteous returns. That's the mantra of the Ugly Portfolio: We make uglies into models.

So, you might ask, who's that burgeoning beauty -- an obscured rendering of America's possible Next Top Model? My scouts are fervently searching, and by that I mean, I am. Wait no further. The candidates are Range Resources (NYSE: RRC), SUPERVALU (NYSE: SVU), and Sanderson Farms (Nasdaq: SAFM).

Range Resources 
For anyone who's talked to me or read anything I've written on the matter, they know I've been pounding the table about natural gas for awhile now: Producers can only sell natural gas below the marginal cost of production (the cost to pull the last unit from the ground) for so long. Yet it's persisted. As good hedges become increasingly scarce and boom-time leases expire, I think natural gas is due for a recovery to something in the vicinity of $6 to $7 per mcf-equivalent.

And Range Resources could be the way to play. The firm's proven a remarkably adroit capital allocator over the years, scooping up acreage in burgeoning plays at unbelievably cheap prices. Recent years are no exception: Range scooped up a large position in the Marcellus Shale's prime acreage, at low cost and favorable lease terms. More important, like Ultra Petroleum (NYSE: UPL) -- a favorite of mine -- its capital structure and breakeven drilling costs enable it to weather the natural gas market's inevitable cyclicality.

My reservation: It's that levered to the Marcellus.

I've been watching SUPERVALU since last summer, and it could just be one of the ugliest stocks out there. The shares are dirt cheap, and perhaps with good reason. It's a grocer, a notoriously competitive industry; operates a series of second- or third-tier chains; carries a huge debt load; and its same-store sales are in free-fall against already razor-thin margins.

So why do I like it? Well, for one, the company's got Craig Herkert, former President of Wal-Mart's Americas division, at the helm. If there's a person who's suited to turning this business, I think it's him. And second, the reason it's hated is the very reason it's an interesting investment. SUPERVALU's been poorly managed, but it can get better. Until recently, the company didn't have a meaningful private label offering, a key draw for cost-conscious customers. Its stores are in pretty sad shape. And unlike its competitors, the company's still working on centralizing supply chain, purchasing, and marketing functions -- a prospectively large cost-saving measure.

Management's gotten its own breed of religion. They're remodeling stores and concentrating on their private-label offerings. They're also focused on paying down debt, and are open to selling "non-core" operations to do it.

Don't get me wrong. Between its debt load and the industry dynamics, this stock could go to zero. But it still produces solid cash flow. At two times trailing free cash flow (which admittedly, might not be a representative figure), a lot of the possible ugly is priced in, and its value-creating measures could deliver several fold.

Sanderson Farms 
I like chicken. The rest of the United States does, too. That was never really in question.

 The trouble is that Sanderson Farms' earnings -- a best-of-breed chicken producer, in an ugly and cyclical industry -- are about to get utterly whipsawed. The company's costs are tied to feed costs, including corn and grain. Yet as a commodity operator, its near-term ability to pass price increases is somewhat limited. Amid rampant food-cost inflation, near-term earnings and cash flow are going to hurt.

And that's exactly why I like it. Sanderson Farms trades at five times trailing operating cash flow, in effect an assumption that its cash flow will gradually erode, for eternity. I don't think that's sustainable, as recent industry consolidation should allow chicken producers (punctuated by Pilgrim's Pride's (NYSE: PPC) ill-fated purchase of Gold Kist) to pass price increases more readily. Also, input costs may well decline. But to be quite honest, I also don't know where or when its earnings stabilize: Sanderson's margins have been unbelievably erratic over the past decade, and arguably, the paradigm on food costs has changed.

That's kept me on the sidelines.

The bottom line
One of these stocks will, in all likelihood, make it into my Rising Star Portfolio in the next month. Have an opinion? Join me on my discussion board, and let me know. I might even answer.

This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. See all of our Rising Star analysts (and their portfolios).

Michael Olsen eats a lot of chicken, never had a chance at America's Next Top Model (although he was asked to judge), and owns shares of Ultra Petroleum. Two of these statements are true. Wal-Mart is a Motley Fool Inside Value pick and a Motley Fool Global Gains recommendation. The Fool owns shares of SUPERVALU, Ultra Petroleum, and Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.