Most market-watchers are entranced by the sight of stocks moving higher and higher. Bruce Galloway of Burnham Securities' Strategic Turnaround Equities Program prefers to watch the stocks that have fallen the farthest. Galloway's database of 12,000 stocks yields 600 that are down 80% to 90% in value since the late 1980s. Galloway then targets 20 to 30 names that seem to have the best chance of a five- to tenfold gain over the next year or so.

Many of Galloway's picks are small stocks that Wall Street has abandoned but that have hidden assets on the balance sheet or have very committed management. A favorite: P.A.M. Transportation Services (PTSI), a Tontitown (Ark.) trucking outfit with a $50 million market cap.

In 1989, P.A.M. was almost bankrupt. In 1990, Central Transport, a much larger private company, bought out co-founder Paul A. Maestri. New management came on board, and in 1992, P.A.M. turned a profit. The stock earned 39 cents per share in 1993 and 50 cents in 1994. Galloway expects it to earn 68 cents in 1995 and 83 cents in 1996.

At 7 1/8, P.A.M. is up about 19% this year. It trades at a price-earnings ratio of about 11, based on 1995 earnings, and at a 9 p-e based on 1996 earnings. "Our average truckload carrier trades at 14 times 1996 earnings, so P.A.M. is at a substantial discount from its peer group and the market," says Morgan Keegan's David Guthrie.

Another Galloway pick is tiny Salton/Maxim Housewares (SALT), a Mount Prospect (Ill.) company that makes appliances such as the Juiceman and Breadman. Its market cap is $20 million. Galloway is optimistic about two new products: I Love Bagels, a bagel-maker, and the George Foreman Lean, Mean Fat-Reducing Grilling Machine.

After a net loss of 58 cents per share in 1994, Salton/Maxim reported net income of 11 cents per share for the fiscal year ended July, 1995. Net sales were up about 80%, to $77 million, compared with a year ago. At 2 5/8, Salton has no debt and trades at book value. Galloway thinks it could earn 60 cents to 65 cents in fiscal 1996.

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