"Being contrarians, we are always looking for laggard stocks with the potential to rebound," says turnaround expert George Putnam.

In his The Turnaround Letter, the advisor reviews four medical and pharmaceutical stocks that have been among the worst performers in the S&P 100 since the market bottom. Despite their poor performance, he thinks they may be due for a rebound.

"We think that investors who got left behind by the first leg of the market rally are struggling to catch up.

"Even among the broad-based market carnage of the past year, regional banks with heavy real estate exposure have been notably poor performers," notes turnaround expert George Putnam.

In The Turnaround Letter, he explains, "While investors are still wary of this group, there are cases where the market has overreacted and the stocks will eventually rebound dramatically." Here, he looks at four favorite regionals.

"Many regional banking stocks are now trading at a small fraction of their 'book value.' In more normal times, most banks will trade for two to three times book value and sometimes more.

"Despite coming close to bankruptcy in 2002, Williams Co. (NYSE: WMB) has some of the premier assets in each of its business segments: exploration & production, mid-stream and pipelines," says turnaround expert George Putnam.

In his The Turnaround Letter, he explains, "The company now has the financial strength not only to survive the current downturn but to grow and prosper."

"Begun in 1908 as a pipeline construction company, Williams is now a major, integrated natural gas company; it produces, gathers, processes and transports natural gas throughout the United States.

After the airline went through bankruptcy twice, turnaround expert George Putnam now sees improving long-term prospects for US Airways (NYSE: LCC).

In his The Turnaround Letter, the advisor suggests, "When travel does begin to pick up again, US Air with its lean cost structure should profit handsomely." Here's his review.

"US Airways began in 1939 as All-American Airways delivering mail to Western Pennsylvania and the Ohio Valley; from there it grew through acquisitions to be a major national airline.

"Walt Disney (NYSE: DIS) is arguably the most prominent entertainment operation in the world today, with one of the world's most recognized brands across all of its major business segments" says George Putnam.

In The Turnaround Letter, he observes, "We believe that the current market volatility and economic weakness provide an opportunity to buy into a preeminent global brand at a temporarily depressed price."

"Disney controls theme parks, such as Disneyland and Disney World; television networks, including ABC and ESPN; movie studios, and character-themed consumer products.

"While the company's financial results have been hurt temporarily by the global economic weakness, we believe it is well positioned to prosper again when economic conditions improve.

"Many experts believe that oil prices are at unsustainably low prices now, and they expect a sharp rise in the commodity price as supply and demand come back into line again," says turnaround expert George Putnam.

In The Turnaround Letter, he suggests, "If oil does begin to rise again, the oilfield service stocks could rebound sharply." Here, he takes a look at large cap plays on a rebound within the oilfield services sector.

"We all know that oil prices have fallen dramatically from their highs in the summer of 2008. But different types of oil-related stocks have reacted quite differently to the price change in the underlying commodity.

"For example, while oil itself has dropped nearly 70% from its 12-month high, the stock of the largest integrated oil company, Exxon-Mobil (NYSE: XOM), is down only 26%, less than the stock market as a whole.

This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.

George Putnam is the newsletter advisory industry's leading authority on distressed stocks and turnaround situations. In his The Turnround Letter, he looks to semiconductor firm Teradyne (NYSE: TER), his top 2009 pick.

"Founded in 1960, Teradyne is the leading maker of automated semiconductor testing equipment. It also produces testing equipment for circuit board assemblies, aerospace and defense instruments, and automotive systems.

"The current short-term prospects for the semiconductor industry are weak, and so many of the chip stocks are down hard. Testing is a key element of semiconductor production, and so the testing equipment producers will prosper when the chip makers rebound.

"Teradyne has been the dominant player in the semiconductor testing market for quite a while and over the last couple of years the company further solidified its leadership position by acquiring competitors and buying back stock.

"Investors have been focusing on the shortcomings at Qwest Communications International (NYSE: Q), and to be sure, it has plenty," observes turnaround specialist George Putnam.

In his The Turnaround Letter, he adds, "But the company also has very valuable assets and strong cash flow. In addition, we believe the stock would command a good premium in a takeover." Here's his bullish review.

"Following its IPO in 1995, Qwest expanded via acquisitions and partnerships, and participated in the telecom bubble of the late 1990's.

"Unlike many of the other high-flying telecoms of that era, however, Qwest realized that in addition to a story you needed customers. In 2000, it went out and acquired US West, which gave Qwest the revenue base to survive the bursting of the telecom bubble

"Although the company survived, the shareholders have had a rocky ride during the current decade. The stock peaked around 60 in 2000, dropped to just above 1 in 2002, rebounded to 10 in 2007 and then declined to its present level.

"Management's challenge is too maximize the value of its assets. One of Qwest's greatest assets, and biggest challenges, is its huge traditional landline telephone business. The landline business is in a slow but steady decline as customers move to wireless or Internet telephony.

"With $37.2 billion in revenues in 2007, Kraft Foods (NYSE: KFT) is the largest food manufacturer in the U.S. and second-largest worldwide," notes leading turnaround stock expert George Putnam.

The editor of The Turnaround Letter explains, "New management has begun to shake things up and the turnaround program is well underway." Here's the advisor's review.

"The roots of some of Kraft's products reach all the way back to 1767, but it wasn't until 1903 that James L. Kraft started his wholesale cheese business from a horse drawn wagon in Chicago. Today, Kraft produces many of the best-known food brands in the world.

"In 1988, Philip Morris (renamed Altria) purchased Kraft, and in 2000 it integrated the purchase of Nabisco into Kraft. Altria sold a small stake to the public in 2001, but maintained majority control until 2007, when the company was completely spun off as an independent company once again.

"Under the Altria umbrella, Kraft stagnated, with declining revenues and little product innovation. As a result, the stock price today is within $1 of the price where it was when first sold to the public in mid-2001.

"New management has begun to shake things up at Kraft. In June 2006, veteran food executive Irene Rosenfeld became CEO, returning to Kraft from a stint at Pepsico running its Frito-Lay division.

"One group of stocks that has always intrigued us are those whose symbols have one letter," notes George Putnam. The editor of The Turnaround Letter explains, "Odd as this idea may at first seem, it actually makes some sense for a deep value investor. These are often old-line companies with well-known brand names. In some cases the single letter symbols were awarded many decades ago."

After reviewing the 19 stocks with single letter symbols (7 are currently unused), Putnam offers six that he says, have been "beaten down pretty badly and now look particularly appealing."'

"Agilent Technologies (NYSE: A), which makes electronic and bio-analytic measuring devices, was spun out of Hewlett-Packard in 1999. Revenues surged in 2000 as did the stock price, reaching a lofty 162.

"But the company subsequently suffered along with its customers in the communications and technology sectors. However, the financials are sound, including strong cash flow that is supporting a $2 billion share buyback, and management has been restructuring and realigning operations for long-term growth.

"You can invest for all the right reasons and still get the wrong result," notes long-standing turnaround stock expert George Putnam, referring to the poor performance of the pharmaceutical sector in recent years.

Here, in his industry-leading The Turnaround Letter, he offers a fascinating review of 10 leading drug stocks which he now believes offer a combination of growth potential at "pretty cheap" valuations. Here is his overview.

"In 2000 and 2001, when the Internet boom was becoming a bust, many smart investors turned away from technology stocks and put their money into drug stocks. How could you go wrong with the big pharmaceutical companies?

"Demand for their products was growing as the population aged. These companies had huge research
and development programs that seemed to keep cranking out new blockbuster drugs. And most of them had great balance sheets, with many paying handsome dividends.

"Much of this reasoning has been borne out in the intervening years. Many large drug manufacturers have rung up substantial revenue gains over the last decade. So what's happened to the big drug stocks? With few exceptions they have gone sideways or down – in some cases down a lot.

"Despite a host of near-term issues, Sprint (NYSE: S) has many of the attributes we look for in a turnaround stock: a solid core business, well-known brands, new management, manageable cash flow and even an activist shareholder to stir things up," notes George Putnam, III.

In his industry-leading The Turnaround Letter, the advisor looks expert at the firm, which he notes traces it roots back to the Brown Telephone Company in Kansas in 1899.

"When the long-distance market was opened to competition in the early 1980's, Sprint moved in aggressively. In early 2005, Sprint acquired Nextel, which had become a major wireless competitor with its innovative 'push to talk' technology that combines elements of the walkie talkie and the cell phone.

"The $35 billion transaction was supposed to vault Sprint into the leadership of the wireless market. Unfortunately, the combined company stumbled. Difficulty in integrating the two companies led to poor customer service which drove some consumers away.

"Investors, who had initially applauded the Nextel acquisition, pushing the stock above $27 in mid-2005, became concerned, and the stock has been in a steady decline for the past two-and-a-half years. And the company's poor earnings report on February 28 further discouraged Wall Street.

"The companies that will fare the best when the next credit crunch hits are those that have large amounts of cash," says turnaround expert George Putnam. "With that in mind," he adds, " we looked for companies with lots of cash, little debt and good businesses in some form of a turnaround."

Here, the editor of The Turnaround Letter looks at Corning (NYSE: GLW), Motorola (NYSE: MOT), Microsoft (NASDAQ: MSFT) and Pfizer (NYSE: PFE).

Putnam explains, "Corning has transformed itself from a marketer of housewares into a leading provider of optical fiber as well as precision glass used in liquid-crystal displays. It also has a presence in the environmental and life sciences industries.