Throughout the first seven weeks of 2014, the stock market has shown a wide range of emotions.#-ad_banner-#

Fear-based selling in January has been replaced by a euphoric buying spree since early February. Yet don’t let the S&P 500’s rebound back to all-time highs fool you. Many individual stocks are now trading far from their 52-week highs, and a rising number of them are now plumbing 52-week lows.

A look at the list of 52-week lows might evoke the old saying that you shouldn’t try to catch a falling knife. These stocks are being sold for good reason, and if the bad news continues, then they’ll keep making fresh 52-week lows.

But contrarians love to look at these kinds of stocks. Warren Buffett’s maxim that you should love stocks when they are hated applies to the broader market action, but many value investors take that maxim more literally: Any individual stock that is deeply out of favor has a better chance of winning new support than stocks that are already fully loved by the crowd.

Here’s a look at some recent stocks making fresh 52-week or even multi-year lows in recent sessions.

Slumping IPOs
It’s not unusual to see some recent IPOs in this group. Chegg (NYSE: CHGG), Fairway Group (Nasdaq: FWM) and PotBelly (Nasdaq: PBPB) all came public in 2013, and are now going through the inevitable resetting of expectations. Newly public companies often try to generate great results right before and after the IPO. Yet after a quarter or two, the company’s real, unvarnished growth rates set in.

Looked at another way, the post-IPO sell-off can create solid opportunities as these companies are no longer subject to unrealistic expectations. I’m a bit cautious on Fairway Group at the moment, as key rivals such as Whole Foods (Nasdaq: WFM) and The Fresh Market (Nasdaq: TFM) are showing signs of intense competition. Student textbook firm Chegg is also a wait-and-see stock, as the young company learns how to generate solid profit margins.

Of the busted IPOs, only Potbelly has my interest right now. A weak fourth quarter has just sent this fast-casual restaurant chain to 52-week lows, but the unique approach to food service at its stores could still become a concept that resonates with consumers as it expands.

Looking at the rest of this group of stocks making 52-week lows, some deep values have begun to emerge.

1. Atlas Air Worldwide (Nasdaq: AAWW )

Shares of this air charter services firm is an even greater bargain. The $813 million market value is just more than $400 million below tangible book value. The good news: Atlas Air bought back roughly 6.5% of its share count in 2013, while shares traded below tangible book value. The better news: The recent fall to four year lows should help strengthen the impact of further buybacks ($60 million remains on a current authorization). Part of this company’s woes are attributable to a faster-than-expected drawdown of troops in Afghanistan. Atlas expects to bring home fewer troops this year, hurting earnings per share (EPS) by roughly $0.70. Also, recent fresh signs of global economic weakness have led management to take a cautious view of airfreight volumes this year. Still, even in tough economic times, this company is quite profitable. Atlas Air generated $305 million in operating cash flow and that figure should still exceed $200 million this year. The current $813 million market value reveals a price-to-cash-flow multiple of just 4.

2. Infoblox (NYSE: BLOX )

This 2012 IPO turned out to be one of the hottest stocks in 2013, thanks to solid sales growth. The company, which sells network management software, saw sales grow from $61 million in fiscal (July) 2009 to $225 million in fiscal 2013. Yet Infoblox’s growing pains have now appeared, and sales are likely to grow just 10% this year. And the slowdown has hammered this once-hot stock.   The fact that fiscal second-quarter sales would likely be stuck in the $60 million range, roughly 10% below consensus estimates was bad enough. Management’s failure to fully explain why growth has suddenly slowed explains why this stock fell so deeply. Investors now need to wait for the Feb. 26 quarterly conference call to better assess Infoblox’s newfound headwinds. Yet if this company’s problems are indeed fixable and likely to be short-lived, then this looks to be an overreaction. To be sure, this is a “multi-quarter normalization effort with management needing to re-establish credibility,” notes UBS analyst Amithabh Passi. Yet he remains convinced that there is “still upside potential in the long-term business model and operating margin profile of the business, especially when compared to peers F5 Networks (Nasdaq: FFIV), Riverbed Technology (Nasdaq: RVBD), and several software companies.  His $25 target price is likely to be bumped higher if the company can cite fixes for recent poor sales execution. Analysts at Goldman Sachs also see value at current levels. Even with the near-term sales challenges, they still think the company’s long-term growth prospects merit a price-to-sales ratio of 4.5, which yields a $27 target price, or roughly 50% above current levels. I like the risk/reward setup here. There is almost nothing management can say on Feb. 26 that can’t hurt this stock further, as baseline (and likely conservative) forward guidance has already been established. And if management can indeed make a credible case for strategies that will renew growth, then shares are likely to again get a lot of interest, now that they trade below $20.

Risks to Consider: Expectations of robust profit growth would be derailed if the U.S. economy took a turn for the worse. And at this point, it’s unclear where the economy is headed

Action to Take –> Looked at another way, these companies are poised for terrific profit growth in a so-so economy. Assuming the U.S. economy finally hits its stride in coming years, the these profit powerhouses are poised to continue. And in some instances, the forward price-to-earnings (P/E) ratios imply ample room for expansion, helping to fuel solid long-term gains.

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