Enough with the emotional opening rant. Stocks are dirt cheap, and I am soon expecting a “rip-your-face-off” rally. Remember, the stocks that have been beaten down the most tend to snapback the hardest.

This week's Rocket Stocks portfolio includes such names as CIT Group (CIT) and Freeport-McMoran (FCX).

CIT Group (CIT): CIT is a commercial lender that has traditionally depended on the capital markets for its funding needs. As a result, the stock has been very high beta and sells off whenever there are liquidity or credit concerns around financial names, as is currently the case.

In the short term, the capital markets gyrations don't impact the stock at all, so, when Goldman (GS) and Morgan (MS) are selling off because they fund their business with short-term paper, CIT shouldn't sell off as hard as it does.

CIT is trading at a substantial discount to its tangible book value of $13.72. The company is expected to make money each and every quarter going forward. Consensus expects 15 cents.

CIT could go to $6.

STEC (STEC): STEC is focused on solid state drive technology that can massively outperform existing flash memory. Unlike flash-based memory cards, SSD emulates a hard-disk drive, thus easily replacing it in most applications. Aided by the continuation of the decline in flash component pricing, with hyper growth in unit volume growth, STEC is poised to outperform in the long term as well as short term (as in next week!).

Last week, STEC management said that its third-quarter adjusted EBITDA and revenue will come in at the high end of its previous guidance. The company said it saw extremely strong performance in its business storage and ultra-mobile personal computing markets.

STEC could go to $8.

Freeport (FCX): The fact that Freeport is trading at $39 per share is simply mind-boggling. Freeport-McMoRan is one of the world’s largest copper, gold and molybdenum mining companies in terms of proven reserves and production levels. The company has worldwide reserves of copper of around 90 billion pounds, 1.8 billion pounds of molybdenum and 41 million ounces of gold, with production levels since mid-2008 of 4.35 billion pounds of copper, 85 million pounds of molybdenum and 1.8 million ounces of gold. In 2007, mining revenues by commodity were comprised of 78% copper, 12% molybdenum and 10% gold.

Freeport could go to $46.

XL Capital (XL): Last month, John Charman, CEO of Bermuda-based Axis Capital, said that regarding acquisitions both large and small, "we would consider acquiring any company that substantially enhances earnings potentia." Charman specifically named XL Capital as one company that the industry is actively poring over as a potential takeover target. He said XL is attractive because it is the first global property-casualty insurance franchise to come on the market since Cigna Corp's ACE nearly a decade ago. Charman stopped short of saying that Axis was interested in acquiring XL, saying investors would have to draw their own conclusions.

XL could go to $8.

On the earnings front, I think Intuitive Surgical (ISGR) and Nucor (NUE) offer compelling risk/reward setups.

On a valuation stand point, Trident Microsystems (TRID) trades for 50% below its cash on the balance sheet.

For more ideas, including CSX (CSX) and Google (GOOG), please check out this week’s Rocket Stocks portfolio.

To find the snapbacks and potential breakouts on a regular basis, check out these Stockpickr portfolios, which I use in my own research each week:

Always check the Biggest Percentage Losers, a list of stocks that lost big the day before, because they can snap back hard.

When you check this list on Stockpickr, you can see which stocks are owned by the quality hedge funds and mutual funds. Pay attention to those. The funds will be buying at the lower prices and likely supporting the stock.

Ditto for the 52-week-low list. You must check the above two lists every day if you hope to find volatile stocks that can snap back

Biotech Short Squeezes: Dendreon and others can often be found in this category.Stocks Rising on Unusual Volume: These are potential breakout plays.

Stockpickr's System Trades of the Day: These are trades triggering that day in various back-tested trading systems we've developed.

Stocks With Unusual Options Activity: Perhaps someone knows something?

Latest Activist Situations: These are stocks that hedge funds are accumulating shares of and demanding change in. Believe me, these hedge funds piggyback each other. And once they start rocking the boat, things happen quickly. This should be on the must-view list.

One final place to frequent is the Answers section on Stockpickr, where ideas such as those presented in this article are thrown around daily. And you can further discuss your ideas and share opinions in Stockpickr's Member Forums section.

By James Altucher

Posted on Oct. 13, 2008