Don't count loser stocks out yet

— -- If history is any guide, the ugliest stocks on Wall Street could surprise their doubters and turn out to be this year's beauties.

While investors often like to chase after the previous year's winners, it's often the losers that wind up scoring big.

Some of the worst five stocks in 2010 and 2009, including H&R Block and Zions Bancorporation, handily beat the market in subsequent years.

Three of the worst five stocks in 2008 also beat the market in 2009..

This limited recent track record is a reminder to investors that sometimes the best stocks are the ones other investors want nothing to do with.

"Some of these stocks (those that fell in 2010) might have more things than meet the eye that make things more interesting," says Robert Maltbie of Singular Research.

This trend might give hope to the most downtrodden stocks of 2011, including First Solar, Alpha Natural Resources and Netflix, which fell a bruising 74%, 66% and 61% respectively.

Investors who dig deeper can see that beat-up stocks can do some surprising things, such as:

•Defy the odds the following year. 2011 was a classic year for stock turnarounds. Three of the five worst stocks in 2010 soared more than 25%, trouncing the Standard & Poor's essentially 0% gain, according to data from S&P Capital IQ. Dean Foods, H&R Block and Apollo Group soared in 2011 despite losing 51%, 47% and 35% of their value in 2010.

•Trounce the previous year's winners. All five of the top stocks of 2010, Netflix, F5 Networks, Cummins, American International Group and Zions lost big in 2011. Netflix and AIG went from top stocks in 2010 to among the worst in 2011.

•Turn in massive gains. XL Group and Genworth wound up more than quadrupling in value in 2009 after being among the five worst stocks of 2008.

Some are hopeful last year's losers might have a better year in 2012. Supply problems that hurt coal processor Alpha Natural are resolved, says Lucas Pipes of Brean Murray. And Netflix is solving its cost and defection issues, says Eric Wold of B. Riley.

There are no guarantees. Stocks can go from bad to much worse. For instance, all five of 2007's worst stocks suffered massive declines in 2008. E-Trade, Circuit City, MBIA, Ambac and Washington Mutual fell 68%, 97%, 78%, 95% and 99.8% respectively in 2008.