These stocks are down, but the editor of the Turnaround Letter says they could be attractive buys. By Thomas M. Anderson, Contributing Editor December 12, 2006 December seems like the ideal time to prune your stock portfolio. Cut the deadwood companies that have lagged for months and bag the capital losses to offset the gains you realized during the year. Then, start the 2007 tax year as fresh as a newly mowed lawn. The flurry of holiday house-cleaning can unfairly punish some stocks in December. "But such year-end selling is often quite temporary, causing investors to throw out good stocks just at the wrong time," says George Putnam, editor of The Turnaround Letter.Putnam has his own holiday tradition. For his newsletter's December issue, he compiles a list of hard-hit stocks that investors should consider buying because the shares have the potential to bounce back or represent long-term investment opportunities. His stock selections deserve consideration. Over the past 15 years, Turnaround Letter's picks have returned an annualized 17%, beating the SP 500 by an average of seven percentage points per year. Here are four stocks he thinks will reward investors in the coming year: Affymetrix (symbol AFFX). This molecular biology research company makes tools that help map the human genome. Despite the vast potential for genetic research, disappointing earnings and an investigation into options backdating have pressured Affymetrix shares. The stock, which closed at $25.84 on December 12, is down 46% for the year. The company's low debt levels and modest valuation compared with its rivals make it worth keeping, Putnam says. But this is not a stock for conservative investors. Bausch Lomb (BOL). It would be tempting for investors to throw Bausch Lomb shares overboard. The stock, at $52.15, is 40% off its mid 2005 high of $87.90. Accounting investigations and the recall of ReNu MoistureLoc contact lens solution caused the Rochester, N.Y., company to delay its financial report for the September quarter. Management has warned that 2007 sales will be lower than it previously forecast. Nevertheless, Putnam sees a comeback: "Bausch Lomb still has great brands and a strong market position." Advertisement Cogent (COGT). When federal law enforcement agencies need to identify fingerprints, they use Cogent systems. You'd think a company like Cogent would be flourishing in a post-9/11 world. But because of overreliance on the Feds, Cogent's sales tend to be "lumpy" -- that is, not steady. And that's something growth-stock investors detest. The stock, at $11.80, has plunged 56% this year. Meanwhile, "the company has maintained profitability, and with no long-term debt," Putnam says. "It has staying power to reward patient investors." International Coal Group (ICO). Owner of the Sago mine, in West Virginia, where 12 miners died last January, International Coal Group has faced steep financial challenges since the tragedy. In October, the company announced its third consecutive quarterly loss. Sagging coal prices are partly to blame. The company, which has mines in West Virginia, Kentucky and Illinois, cut back production. However, the long-term outlook for coal is bright. The federal Energy Information Administration estimates that U.S. demand for coal will increase more than 50% in the next 25 years. Putnam thinks financier Wilbur Ross, who created International Coal Group in 2004, has put together a good management team that can generate long-term value for shareholders. At $5.32, the stock is down 43% this year.