Stock prices can be depressed for prolonged periods of time. Investing in these out of favor stocks might be extremely profitable if investors aren’t too early. Insider Monkey, your source for free insider trading data, compiled the list of 27 stocks that had negative returns during the past 12 months but are currently favored by Wall Street analysts and hedge funds. The analysts’ target prices are sourced from Bloomberg. The stocks are ranked based on the expected 12-month gain in stock prices. Some of these out of favor stocks have already started to take off and have had significant returns so far in 2011. Micron (MU) and RRD are among these names, but most of the other stocks have negative returns this year. Here are analysts and hedge funds’ favorite out of favor stocks:

Company	Ticker	Last Price	Analysts' Target	No of Hedge Funds
BANK OF AMERICA	BAC	12.42	18.12	42
SOUTHWEST AIR	LUV	11.55	16.75	8
CISCO SYSTEMS	CSCO	16.73	23.34	33
GOOGLE INC-CL A	GOOG	526.84	734.32	43
MICRON TECH	MU	10.42	14.48	13
HEWLETT-PACKARD	HPQ	39.75	54.35	25
MICROSOFT CORP	MSFT	25.08	33.68	50
RR DONNELLEY &	RRD	18.84	25	10
CITIGROUP INC	C	4.42	5.74	56
CARNIVAL CORP	CCL	37.55	48.42	18
INTEL CORP	INTC	19.62	25.18	17
US STEEL CORP	X	50.49	64.57	9
AFLAC INC	AFL	51.58	65.77	10
BEST BUY CO INC	BBY	29.22	36.94	15
VISA INC-CLASS	V	75.68	95.65	24
ROBERT HALF INT	RHI	29.22	36.91	5
MEDCO HEALTH SO	MHS	55.97	70.57	17
CORNING INC	GLW	19.49	24.53	12
STAPLES INC	SPLS	20.09	25.27	10
GANNETT CO	GCI	15.39	19.33	12
METLIFE INC	MET	43.37	54.45	10
STATE ST CORP	STT	44.67	56	17
TARGET CORP	TGT	50.27	62.76	19
INTL GAME TECH	IGT	15.87	19.58	10
DR HORTON INC	DHI	11.67	14.31	12
FEDEX CORP	FDX	91.96	112.29	19
AMGEN INC	AMGN	55.22	66.12	13

Bank of America tops the list with an expected 46% return in the next 12 months. Nearly a quarter of the 175 hedge funds we follow had large positions in BAC at the end of December. John Paulson’s Paulson & Co and Bruce Berkowitz’s Fairholme each had more than $1 Billion invested in BAC. Citigroup is the only other banking stock that is at the top of the list. The top of the list is dominated mainly by mega-cap technology stocks. Cisco, Google, Hewlett-Packard, Microsoft, and Intel are extremely favored by hedge funds and Wall Street analysts. All of these stocks are among the 12 technology stocks that hedge funds love. Unfortunately all of them had negative returns so far in 2011. We believe these 27 stocks as a group have value characteristics and will outperform the market over the next year or two.