Investors in the stock market beat their brains out looking for the best companies. But according to Market Logic newsletter (3471 N. Federal Highway, Fort Lauderdale, FL 33306), they'd be better off seeking out the very worst corporations instead.

In 1987, Market Logic published research suggesting strongly that the stocks of the poorest-performing companies, based on a wide range of financial standards, actually tended to beat not only the general market but also those stocks with the best financial performance.These results did not reflect any dramatic improvement in the bad companies' fortunes, according to Market Logic, but rather the fact that "the market had simply overdone its pessimism and had pushed their shares to levels that discounted their problems and actually turned them into undervalued stocks."

Now, according to Market Logic, dramatic new evidence has been published that confirms the wisdom of investing in the worst companies available.

A recent article in Financial Analysts Journal described how Barry B. Banister, an officer for a large investment trust company in Alabama, ranked the performance of all the stocks in the Standard & Poor's 500 at the end of each year from 1977 to 1986.

Banister based his rankings on six telling measures of financial condition: 1) five-year growth of total assets; 2) five-year growth of stockholders' equity; 3) five-year profit margin; 4) five-year average return on total capital; 5) five-year average return on equity; 6) five-year average price-book value ratio.

Any company that ranked in the top third of all six of these categories was tabbed by Banister "an excellent company," while any company that finished in the bottom third was called "an unexcellent company."

Surprise of surprises: In six of the 10 three-year periods covered by Banister's statistics, the unexcellent companies beat not only the performance of the S&P 500, but also that of the excellent companies as well. During the entire 12-year period covered by the study, the stocks of the unexcellent companies appreciated at a 20 percent annual rate, compared with 17 percent for the S&P 500 and only 14 percent for the excellent companies.

In the latest three-year period ending June 30, according to Banister's statistics, the unexcellent companies again trounced the better-run counterparts 27 percent to 8 percent. And over the entire course of the study, according to Banister, "takeover activity in the unexcellent companies overwhelmed takeover activity in the excellent companies. Between 1977 and 1989, 31 percent of the companies in the unexcellent group were taken over, while only 17 percent of the companies in the excellent group were taken over."

Market Logic asked Banister for his latest list of unexcellent companies. It contains 36 names:

Amerada Hess, Armco, BankAmerica, Beverly Enterprises, Chase Manhattan, Clark Equipment, Columbia Gas, Control Data, Coors (Adolph), Cross & Trecker, CSX, Cummins Engine, Data General, Datapoint, Dresser Industries, First Interstate Bancorp, Foster Wheeler, Honeywell, Kerr-McGee, Lone Star Industries, Manufacturers Hanover, McDermott International, Mellon Bank, Mobil, M/A-Com, National Intergroup, Pittston, Rowan Cos., Sonat, Sun Co., Texaco, U.S. Home, USX, Wang Laboratories, Williams Cos., Zenith Electronics.

Investor's Notebook reflects the opinions of professionals. It does not endorse specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited.