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Wednesday may have been a great day for the bulls, but there are still many challenges facing the stock market over the coming weeks...

If you'd like to protect your portfolio against a possible downturn, the following list might interest you...

All of the stocks mentioned below have outperformed the S&P 500 during both downturns over the last year. We define a downturn by comparing the S&P 500 index value against the 20 day simple moving average--a downturn occurs when the S&P 500 value dips below the SMA20.

To compile the list, we did some backtesting on the following time intervals (click for expanded images):

We wanted to find a list of companies that might be underestimated. So we started by focusing the backtest on companies with high short interest, and identified a list of about 80 short squeeze candidates that have outperformed the S&P 500 during both downturns over the last year (as defined by the graph above).

To refine the list, we collected data on institutional flows during the current quarter, and identified the final list of 7 companies that have seen extreme selling by big money managers.

Here is a graphical representation of an equal-weighted index of the stocks mentioned below, between April 26, 2010 and Aug 31, 2010:

…and here is a graphical representation of an equal-weighted index of the stocks mentioned below, between February 18, 2011 and March 21, 2011:

If you'd like to access the complete data used in the backtest, click here.

History suggests that these companies will outperform during a downturn, but short sellers and big money managers have been very bearish on these names. Is this extreme pessimism warranted, especially when considering the headwinds faced by the market? Not to mention the resilient track record of these names?

If you're a contrarian, this excessive pessimism might raise a flag...

Of course, past performance is no guarantee of future results. So use this list as a starting point for your own analysis.

1. JAKKS Pacific, Inc. (NASDAQ:JAKK): Toys & Games Industry. Market cap at $515.08M. Short float at 15.16%, which is equivalent to 24.15 days of average trading volume. Institutional investors have been net sellers of 698.4K shares during the current quarter, which represents about 2.63% of the company's float.

Past Performance During Downturns:

- Closing price on 02/18/11 at $18.22 vs. closing price on 03/21/11 at $18.57 (price return of 1.92% for the period, outperforming the S&P 500 index by 5.24%).

- Closing price on 04/26/10 at $15.55 vs. closing price on 08/31/10 at $14.9 (a price return of -4.18% for the period, outperforming the S&P 500 index by 9.25%).

2. ICU Medical, Inc. (NASDAQ:ICUI): Medical Instruments & Supplies Industry. Market cap at $615.38M. Short float at 15.5%, which is equivalent to 24.11 days of average trading volume. Institutional investors have been net sellers of 508.6K shares during the current quarter, which represents about 4.28% of the company's float.

Past Performance During Downturns:

- Closing price on 02/18/11 at $42.51 vs. closing price on 03/21/11 at $42.26 (price return of -.59% for the period, outperforming the S&P 500 index by 2.74%).

- Closing price on 04/26/10 at $34.91 vs. closing price on 08/31/10 at $35.61 (a price return of 2.01% for the period, outperforming the S&P 500 index by 15.43%)

3. BJ's Restaurants, Inc. (NASDAQ:BJRI): Restaurants Industry. Market cap at $1191.83M. Short float at 18.78%, which is equivalent to 15.78 days of average trading volume. Institutional investors have been net sellers of 1.6M shares during the current quarter, which represents about 6.98% of the company's float.

Past Performance During Downturns:

- Closing price on 02/18/11 at $36.34 vs. closing price on 03/21/11 at $36 (price return of -.94% for the period, outperforming the S&P 500 index by 2.39%).

- Closing price on 04/26/10 at $26.38 vs. closing price on 08/31/10 at $23.94 (a price return of -9.25% for the period, outperforming the S&P 500 index by 4.18%)

4. Rackspace Hosting, Inc (NYSE:RAX): Internet Software & Services Industry. Market cap at $5.6B. Short float at 16.42%, which is equivalent to 8.09 days of average trading volume. Institutional investors have been net sellers of 7.0M shares during the current quarter, which represents about 7.76% of the company's float.

Past Performance During Downturns:

- Closing price on 02/18/11 at $38.45 vs. closing price on 03/21/11 at $37.91 (price return of -1.4% for the period, outperforming the S&P 500 index by 1.92%).

- Closing price on 04/26/10 at $19.7 vs. closing price on 08/31/10 at $19.69 (a price return of -0.05% for the period, outperforming the S&P 500 index by 13.37%)

5. RPC Inc. (NYSE:RES): Oil & Gas Equipment & Services Industry. Market cap at $3.76B. Short float at 27.3%, which is equivalent to 7.34 days of average trading volume. Institutional investors have been net sellers of 18.6M shares during the current quarter, which represents about 37.19% of the company's float.

Past Performance During Downturns:

- Closing price on 02/18/11 at $18.69 vs. closing price on 03/21/11 at $22.48 (price return of 20.28% for the period, outperforming the S&P 500 index by 23.6%).

- Closing price on 04/26/10 at $13.21 vs. closing price on 08/31/10 at $16.31 (a price return of 23.47% for the period, outperforming the S&P 500 index by 36.89%)

6. Ebix Inc. (NASDAQ:EBIX): Business Software & Services Industry. Market cap at $799.59M. Short float at 22.36%, which is equivalent to 6.92 days of average trading volume. Institutional investors have been net sellers of 1.4M shares during the current quarter, which represents about 4.48% of the company's float.

Past Performance During Downturns:

- Closing price on 02/18/11 at $25.03 vs. closing price on 03/21/11 at $29.45 (price return of 17.66% for the period, outperforming the S&P 500 index by 20.98%).

- Closing price on 04/26/10 at $16.19 vs. closing price on 08/31/10 at $18.57 (a price return of 14.7% for the period, outperforming the S&P 500 index by 28.13%)

7. The Children's Place Retail Stores, Inc. (NASDAQ:PLCE): Apparel Stores Industry. Market cap at $1.42B. Short float at 23.06%, which is equivalent to 6.56 days of average trading volume. Institutional investors have been net sellers of 2.1M shares during the current quarter, which represents about 8.81% of the company's float.

Past Performance During Downturns:

- Closing price on 02/18/11 at $47.06 vs. closing price on 03/21/11 at $47.59 (price return of 1.13% for the period, outperforming the S&P 500 index by 4.45%).

- Closing price on 04/26/10 at $49.67 vs. closing price on 08/31/10 at $43.66 (a price return of -12.1% for the period, outperforming the S&P 500 index by 1.33%)

Source: Backtesting 7 Very Resilient Stocks That Are Being Underestimated