The year 2007 has been challenging for Knight Capital Group Inc. (NASDAQ: NITE), a financial services company that dropped below $12 after trading near $22 in January. A recent earnings report for the third quarter probably won't do much for the stock price either, as it showed net income down 47% from the third quarter of 2006.

But, as a recent Goldman Sachs report argued, it's starting to look like the battering has gone too far, and the stock may well be due for a turnaround in 2008.

The Goldman report looked to a stock repurchasing program, as well as the sale of 50% of the DirectEdge division. Other analysts have pointed out that the losses in the third quarter were due to the company's expectation that it will have to repay fees at its Deepwater hedge-fund division, and that the fund has actually been meeting and even exceeding expectations so far this year, which suggests things should look better soon. Meanwhile commissions and fees have been rising nicely.

A stock like this is only good for investors who can stomach a bit of risk and have the time to be patient. If you're one of these investors, you may want to buy soon and be prepared to wait at least 12 months to see the results.

Type of Stock: A large trading company coming off a rough year.

Price Target: Goldman expects this to hit $18 within the next 12 months. That would be a 50% gain! I bet it could happen, but I suspect it may take a longer time horizon to reach $18.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing.

MOST NOTEWORTHY: The exchange sector, Progenics Pharma, Tyco Electronics and PharMerica were today's noteworthy initiations:

• Keefe Bruyette initiated coverage on Exchange Sector: The firm started shares of CME Group Inc (NYSE: CME), NYMEX Holdings Inc (NYSE: NMX) and NYSE Euronext Inc (NYSE: NYX) with Outperform ratings and a $669 target, $147 target and $90 target, respectively. The firm also started shares of Investment Technology Group (NYSE: ITG), Nasdaq Stock Market Inc (NASDAQ: NDAQ) and IntercontinentalExchange Inc (NYSE: ICE) with Underperform ratings and a $47 target, $36 target and $158 target, respectively, and shares of Knight Capital Group (NASDAQ: NITE) with an Underperform rating and $13 target.
  
• Progenics Pharmaceuticals (NASDAQ: PGNX) was added to Friedman Billings' Top Picks list and its Outperform rating was maintained. The firm has a high degree of confidence in the success of the MNTX Ph III studies in post-operative ilieus, as well as the FDA approval of the subcutaneous injection in terminally ill patients with opiod-induced constipation around the 1/31/07 PDUFA date.
• RBC believes margin expansion will drive long-term appreciation in Tyco Electronics Ltd (NYSE: TEL) and started shares with an Outperform rating and $41 target.
• PharMerica Corporation (NYSE: PMC) was initiated with an Underperform rating at Bear Stearns. The firm believes PMC will be pressured by customer losses and generic reimbursement cuts and sees shares trading in $12-$13 range.

OTHER INITIATIONS:

• Ryanair Holdings (NASDAQ: RYAAY) was initiated with a Market Outperform rating at Avondale.u
• Banc of America initiated shares of Town Sports International (NASDAQ: CLUB) with a Sell rating and $15 target.
  
• Goldman started shares of Genesis Lease Ltd (NYSE: GLS) and Aircastle Ltd (NYSE: AYR) with Neutral ratings.