NEW YORK (MONEY Magazine) - The hits just keep on coming. Over the past 12 months a number of big-name companies have been caught up in scandals or blunders -- maybe not Enron-bad, but bad enough to keep investors off-kilter.

Two of the world's largest drugmakers have revealed serious safety concerns about some of their best-selling pills. Regulators have told the politically connected mortgage giant Fannie Mae to restate past earnings, which could wipe away $9 billion in profits.

And insurer AIG, led by Wall Street legend Hank Greenberg, got tangled up in an investigation into the grubby bid-rigging games played by some insurance brokers.

Has all this turmoil produced a crop of bargain stocks? The answer is a qualified yes. There are plenty of depressed, out-of-favor stocks in the market, and many of those shares not only are cheap but also look poised for a rebound.

Mixed in with them, however, are companies that look cheap on paper but are still vulnerable to a few more blows. The trick is telling the difference.

That's never easy. But there are some basic principles every contrarian can follow. For a start, make sure that a company's underlying businesses are solid and still capable of growth.

One example of this is Tyco International, which is expected to grow earnings at an annual rate of 16 percent and has more than doubled in value since its top executive was charged with fraud in September 2002.

But Tyco also illustrates another rule: When it comes to companies facing big legal or accounting worries, wait until you're convinced that the worst really is over -- or at least that it's accounted for in the stock's price. Investors who tried to make contrarian bets on Tyco earlier in 2002, when questions about the company's accounting first knocked the stock down, still haven't gotten back to even.

Finally, examine your comeback kid's balance sheet. A company has more time to execute a turnaround when it doesn't have a lot of debt on its books.

That's the theory -- now for the practice. On the following pages, you'll get the skinny on six major stocks that suffered nasty headlines and big sell-offs within the past year. Four look like they're still real contenders. The other two are likely to stay on the ropes for a while.

Next: AIG