"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 Nasdaq.com:

52-Week High

Currently Fetching

CAPS Rating (out of 5)

StemCells  (NASDAQ:STEM)

$3.63

$1.54

***

i2 Technologies (NASDAQ:ITWO)

$27.46

$12.50

**

Southwest Airlines  (NYSE:LUV)

$16.96

$12.54

**

Micron Technology  (NYSE:MU)

$14.31

$7.53

**

Circuit City (NYSE:CC)

$22.02

$4.75

*

Companies are selected from the "NASDAQ 52-Week Low" list published on Nasdaq.com on the Saturday following close of trading last week. 52-week high and current pricing provided by Yahoo! Finance as of the same date. CAPS ratings from Motley Fool CAPS.

Beggars can't be choosers
Mr. Market's mood perked up a bit last week -- which, from my perspective, is actually bad news. Professional cutlery jugglers prefer it when Mr. Market upends whole silverware drawers at once, making no distinction between good and bad stocks. That's when we get a chance to grab the good silver and leave the stainless behind.

In contrast, when buyers come out in force, as they did on Friday, the cheap stuff we do find is often "cheap for a reason." At least, that seems to be how CAPS investors see things. Of the five stocks on today's list hitting their 52-week lows, none rates above average. In fact, only one company gets even the grudging acceptance of a three-star rating. But as that seems to be the closest we're going to get to a CAPS endorsement, this company will be our focus today: StemCells, a small-cap researcher into, um, stem cells -- and the medical uses thereof.

To be clear, the consensus of the CAPS community is not optimistic on this one, but individual players are bullish. Let's find out why as we examine...

The bull case for StemCells

  • Reading through the pitches for StemCells, one theme sounds repeatedly -- StemCells boosters put a lot of faith in the 2008 presidential race, and the chances of a Democratic victory therein. RickeyBostonJr's pitch typifies the thinking: "The Democrats have nearly a sure shot at taking office in the next presidential election. All of the money funded toward the war will be poured into Stem Cell research. The democrats are always concerned with ways to cure deseases."
  • Not to mention making "replacement parts." axlerod asks the rhetorical question: "Who doesn't want a backup heart or liver?"
  • castilloelmorro calls "stem-cell research ... the new frontier in the world of medicine. Somewhat like Microsoft [ (NASDAQ:MSFT)] was back in the '80's to computer advances. StemCells Inc is one of the only ones to have FDA approval for Phase I research - trying to find a solution for Batten's disease (a rare degenerative disease which strikes mostly young children and which is almost always deadly). It is also now (with an international partner in [E]urope) branching into stem cell research for the treatment of liver diseases such as cirrhosis and hepatitis. It's one of the few out there that is really trying and isn't just mouthing off with press releases every week."

Was that a jab at Geron (NASDAQ:GERN)? Sure looks like it. StemCells' larger rival does seem to be a charter member of the press-release-a-week club. On the other hand, Geron has roughly 100 times more license and royalty revenue than StemCells (though the totals still aren't anything to brag about). Little wonder, then, that CAPS players are ambivalent on the latter (although to be fair, they also give Geron three stars).

Personally, neither stock looks terribly attractive to me, so I won't be predicting a bounce this week. GAAP-unprofitable and burning cash, StemCells and Geron bear little resemblance to Microsoft as I remember it. While the Fool's data provider, Capital IQ, doesn't give profit data on Microsoft before 1990, it does tell us that the software firm hasn't lost a penny since that year. In contrast, neither StemCells nor Geron has made a penny during their existence. (Again, to be fair, much of the reason for that is because of their large R&D budgets.)

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about StemCells -- or even what other CAPS players are saying. We also want to hear your thoughts. Will putting Sen. Obama in the White House, or Sen. Clinton, or Sen. Edwards, be enough to turn this company's earnings from red to black ink? Click on over to Motley Fool CAPS and tell us what you think.

Microsoft is a Motley Fool Inside Value selection.

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. 868 out of more than 78,000 players. The Fool has a disclosure policy.