#-ad_banner-#Although the market action was a bit choppy in the first quarter of 2015, one fact is inescapable: the major indices are all within a few percentage points of their all-time highs.

Yet, for hundreds of stocks in those indices, there is little reason for good cheer. Share prices are far from the 52-week high and aren’t  on many investor’s “buy list” right now.

For contrarian investors, an unloved status can spell opportunity. Today’s out-of-favor stocks often become tomorrow’s in-favor stocks. They just need headwinds to morph into tailwinds.

With that in mind, I’ve spent the past week analyzing the market’s laggards. Many of them toil in the beleaguered energy sector, and even though oil prices have staged an impressive recent mini-rally, I remain concerned about what will happen when our nation’s oil storage tanks finally hit capacity in coming months. So, I focused my research on companies outside this sector. Here are three stocks that appear to have hit bottom and have catalysts for a rebound.

Rayonier Advanced Materials, Inc. (NYSE: RYAM)
Investors love to hear about spin-offs. Shares of the parent company typically post nice gains after spin-off plans are announced, and shares of the spun-out entity are typically priced at a level that ensures solid demand.

This company is the rare exception. Its shares have been in freefall since the spin-off from the parent company Rayonier, Inc. (NYSE: RYN). This must be especially disheartening to Paul Boynton, who resigned his position as president of the parent company to run the spin-off.

This beaten down stock is not the result of bad management execution but is instead a case of awful timing. RYAM, along with two other firms, controls the market for cellulose fibers. You’ll find the material in the filter of a cigarette. That product accounts for 70% of RYAM’s revenue. So when China announced plans last summer to implement smoking reduction initiatives, demand for cigarettes in China (the world’s largest tobacco market) slumped. This resulted in mountain of unsold cigarettes, which needed to be worked through. Orders for RYAM nearly dried up.

But China didn’t ban smoking, which is still quite popular in the country. And demand for RYAM’s cigarette filter product, known as acetate tow, will eventually resume. Analysts at DA Davidson now see major upside to shares: “We retain our BUY rating due to our conviction that this is a nasty down cycle (not a dead industry) and because we believe the replacement value of RYAM’s assets approaches $3 billion, nearly twice the current enterprise value.”

Century Aluminum Co. (Nasdaq: CENX)
One clear sign of when a stock in freefall has likely hit bottom is when management announces a share buyback program. Presumably, any further waves of selling are met by the countering force of shares being pulled from circulation. The company just added another $50 million to an existing $80 million share buyback program, which could reduce the share count by nearly 10% this year.

Such a move might seem risky in light of the fact that aluminum industry fundamentals aren’t looking sharp right now. But analysts at Merrill Lynch, who now have the lowest earnings per share forecasts for CENX, still think the company will be generating roughly $100 million in free cash flow in each of the next three years. For shareholders that witnessed this stock plunge by more than half over the past six months, the buyback expansion comes as welcome news.

Avon Products, Inc. (NYSE: AVP)
Although Warren Buffett’s Berkshire Hathaway is famous for buying healthy companies with wide moats, other well-funded investment firms like to hunt weakened prey. They typically aim to acquire broken businesses, take them private and bring them public a few years later when operations have been rebuilt.

That’s the thinking about recent takeover chatter for this deeply-distressed consumer products firm. Avon went through a multi-year restructuring, only to find that the surging dollar was wreaking havoc on its international sales efforts.  Shares have been weak and getting weaker.

Shares may have found a floor at current levels, thanks to buyout rumors that emerged in late January. B. Riley’s Linda Weiser told the Wall Street Journal that Avon would likely fetch $11-to-$14 a share in a buyout offer. The company currently trades around $8 a share. Regardless, Avon’s decision to walk away from a $24.75 a share offer back in 2012 now seems quite foolish.

Risks To Consider: These companies are all in the midst of a challenging year, and there is no assurance that current business trends won’t worsen before they get better.  

Action To Take –> As we’ve noted many times in the past, you want to hate stocks when they are loved and love them when they are hated. These three stocks have few fans right now, but could quickly regain traction once business trends appear to turn the corner.

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