If you've been tempted to seek investment opportunities in the collapse of the subprime market, or you've been watching the Chinese bubble continue to expand while dreaming of picking through the wreckage after it pops, you're probably a value investor like me. And like me, you might have been thinking about how to tell the future winners from the losers -- and the also-rans. Market crises always produce risks and opportunities in equal measure. How do you tell which is which? A look backward might help us in the future.

History lesson
In the heady days of the dot-com boom, Akamai's (NASDAQ:AKAM) IPO was one of the most eagerly awaited. The company, led by MIT math whiz Danny Lewin, had created a way to accelerate its customers' corners of the Internet, dramatically lowering download times and making innovations like streaming video possible on a wide scale. When it finally went public in 1999, Akamai's stock jumped out of the gate, accelerating skyward to a high near $350 a share early in 2000. The stock's upside seemed limitless.

But in October 2002, you could have bought those same shares for less than $0.70. What happened?

Well, lots of things. Akamai's systems hit complexities its engineers hadn't anticipated. Squabbles with key investors turned into lawsuits. The charismatic Danny Lewin, whose vision had guided the company, was killed in the 9/11 terrorist attacks. But most of all, the bubble had burst: The mountain of wishful thinking and unrealistic expectations that had driven so many "dot-com" stocks higher in the late 1990s collapsed, taking Akamai's share price -- and those of many of its clients -- with it.

Many dot-com companies died, getting liquidated or acquired for a few cents on the dollar. Others, like onetime e-commerce darling Art Technology Group (NASDAQ:ARTG), managed to survive, though they now sport greatly reduced expectations and single-digit stock prices.

But Akamai has more than recovered. It's closer than ever to realizing Lewin's vision, handling 20% of all web traffic and growing by leaps and bounds. The stock price has recovered, too -- at $50 a share, it's a 70-bagger for those who bought near its lows.

But how would you have known to buy Akamai versus Art Technology Group or any of the other fallen former superstocks?

Picking through the rubble
It's easy to say that the signs of future success were there in retrospect. But the careful observer could have spotted clues in Akamai's press release at the close of 2002.

Akamai lost a ton of money -- $202.6 million -- that year. But it still had $125 million in cash at year's end, its debt was under control, and its customer list was growing. More importantly, those new customers were different. Where once Akamai had trumpeted wins like IshopHere.com, these new clients had names like Staples (NASDAQ:SPLS) and Molex (NASDAQ:MOLX) -- companies that could be counted on to pay their bills. Akamai's management was making a stand, trying to turn things around, and these wins were important signs of its success.

The lessons
What can we learn from this? A few points:

  • Akamai was a good business, even though it was losing money. Good companies will still have to deal with the market conditions that caused the bubble to burst. If you find a company with sustainable profits that's underpriced because of market wreckage, buy it. But don't be afraid to buy a company with losses if other factors look promising. Akamai's moat, value proposition, and reputation were still largely intact, despite difficult market conditions.

  • Akamai had cash on hand and a manageable debt load. Companies that need to take on debt at a market trough may end up paying dearly for it, or even be destroyed. Look carefully at the company's debt load, whether it's increasing, and whether any conditions are attached to that debt.

  • Management had a clue. Management was keeping its best existing clients, still delivering as promised, and most importantly, winning over strong new clients as well. More than anything else, this was crucial to Akamai's success.

Some of the keys to finding winners will be specific to the industry you're examining. For example, as Fool Richard Gibbons explains in greater detail here, liquidity, lending standards, and conditions on debt are vital in finding the best subprime lenders.

But in your search to find riches among the ashes of an out-of-favor sector of the market, you can reliably search for several basic things. Those common attributes of promising stocks -- sound management and strong fundamentals -- are straightforward, and worth looking for.

To learn more about finding stocks with good value, check out the Fool's Inside Value newsletter. All their research, insight, and stock recommendations can be yours with a 30-day free trial. There's no obligation to subscribe.

Fool contributor John Rosevear owns shares of Art Technology Group, but does not own any of the other stocks mentioned. Akamai is a Rule Breakers selection. The Motley Fool has a disclosure policy.