Most of the time, rifling through the trash for treasures results in nothing but dirty, smelly hands. Once in a while, though, there's something of value among the banana peels and used toothbrushes.

On Wall Street, a group of pros has had success identifying stocks others have passed over or discarded. "When we see fear and uncertainty and panic selling, we get very excited," said Larry Pitkowsky, the manager of the GoodHaven (GOODX) fund.

Value investors have plenty of stocks from which to choose. From May through September, the market shed 17% in one of the fastest and steepest summer free falls since World War II, according to data from Standard & Poor's. Stocks were buffeted by investor fears that corporate profits might slow and by an aversion to owning anything not backed by the full faith and credit of the U.S. government.

Connor Browne, co-manager of the $3.5 billion Thornburg Value (TVCFX) fund, said the market's recent struggles created deals on par with those last seen during the financial crisis.

He and other value managers used the pullback to buy names from their wish lists.

Wally Weitz, co-manager of the Weitz Value (WVALX) fund, spent $61 million on Aug. 8 buying stocks that had fallen out of favor, including Wells Fargo (WFC, news), a "perfectly safe" company that had fallen under the cloud hanging over all financial stocks, he said. The stock fell more than 20% in the six months through September.

Weitz tunes out the market's day-to-day swings and focuses on how he thinks a company will look 20 years down the road.

Thornburg's Browne recently bought Community Health Systems (CSX, news), a hospital operator in Tennessee, after the stock had fallen nearly 40%. "It's exactly the kind of company that the market has gotten nervous about," he said.

Value investors have focused not just on downtrodden names. Some also bought shares of companies that, though not cheap, had nonetheless become compelling bargains for the first time in a while.

Weitz bought shares of Walt Disney (DIS, news), "a great company that's rarely at our price."

Likewise, Sarah Ketterer, manager of the Causeway International Value (CIVVX) fund, had been following shipbuilder Sembcorp Marine (SMBMF) and pounced on the stock after the Singapore company's shares had sunk by more than 30%. She also scooped up European names she liked, including Swiss insurer Zurich Financial Services (ZFSVF) and German software company SAP (SAP, news).

Of course, all the problems in Europe, along with the shaky economy in the United States, could bury these and other stocks under another layer of detritus.

And sometimes the beaten-down stocks turn out not to be hidden gems at all. They become what Wall Street pros call a value trap, and their stocks never recover.

But the value managers are willing to bet that their recent Dumpster diving will pay off over the long run. Despite the risks, the value managers believe the odds of picking up a valuable stock in this bad market makes more sense than trolling for valuables at the local landfill.

Smart picks from value managers  
CompanySectorWhy buy?
Cooper Tire & Rubber (CTB, news)Rubber and plasticsValuation, steady consumer demand
Wells Fargo (WFC, news)Financial servicesRelatively safe bet in recovering industry
Sembcorp Marine (SMBMF)Shipbuilding and repairValuation
Pool (POOL, news)Swimming pool suppliesDominant share of a steady market
Grupo Prisa (PRIS, news)Spanish-language mediaTextbook division strong in emerging markets

This article was reported by Elizabeth O'Brien for SmartMoney.