While most of the stock market continues its stomach-knotting freefall, there are spirited advances taking place in a handful of issues nonetheless as any glance at the daily most active list reveals.

They are the takeover candidates, the star performers in a market that continues to surprise by its determination to keep sinking lower.

Take last week's most active stocks on the New York Stock Exchange. To name a few:

Alcon Labs, up $8,625 to 29 per cent for the week, as a result of a $42 a share tender offer by Switzerland's Nestle S. A.; Western Publishing, up $7,875 or 30 per cent on the basis of tantalizing nibbles from several suitors; Miles Labs, up $5,375 after the company agreed to a $47 a share buyout by Bayer A. G., the West German chemical giant.

And on the Amex, Hycel Inc. up $2,125 to $5,7875 for a whopping 57 per cent gain as a result of takeover prospects.

A company doesn't even have to be subject to an actual takeover bid to find its shares going for a flyer - a takeover rumor will suffice. And each day has brought its share of new contenders, often to be shot down the following day or even hours later, but not before a significant price move takes place.

The rumor of recorded tender offers jumped from 7 in 1960 to 62 in 1968 and 107 last year. The 1975 record of 113 is expected to be surpassed this year.

These often obscure companies have been shunned by ordinary investors prior to the takeover bid, their shares languishing at prices that are lower than the current asset value of the company despite what are often excellnt earnings records and growth prospects. Which is precisely the point.

To the acquiring company they look like bargains. And the takeover route has become an inexpensive way to expand. Assets with a high return potential can be purchased more easily and more cheaply than if a company were to go out and start investing in new plant and equipment.

"You'd think it's two separate markets, and in some ways, it's akin to the two-tier market of the early 1970s," commented David A. Baker, director of investment strategy for Drexel Burnham Labert. His reference was to the high valuation placed on the so-called glamor or growth stock at the beginning of this decade while the majority of stocks was largely neglected.

"Today there are investors looking for shares for traditional investment purposes, and there are those looking for companies as operating entities," Baker added. He noted that the price of securities in relation to the replacement costs - or what it would cost today to build the same company from scratch - are all levels that haven't been seen since World War II.

"The premiums companies are paying over current prices are still substantial discounts over the replacement costs," Baker said.

Richard J. Hoffman, chief investment strategist for Merrill Lynch. Pierce Fenner & Smith pointed out that for foreign purchasers like the Germans or Swiss (who are involved in two of the takeovers listed above), the bargains are even greater because of the tive appreciation of their respective currencies against the U.S. dollar.

"If a Swiss person stayed out of our market from 1970 to now, he is buying the American Dow Jones industrial average at the equivalent of his currency at a 450 level. That's the level of the Dow Deflated in relation to the Swiss franc."

For the individual investor, his interest is to find the undervalued company before the takeover bid is made and to reap his own quick killing.

But Hoffman, while acknowledging that his and other brokerage firms have indeed been under pressure from retail clients to come up with such candidats, cautions that "getting the one where the lightning strikes is very hard."

Nonetheless, both brokerage firms are sifting lists of the so-called secondary stocks to identify sound but neglected companies which are undervalued in the market and therefore have a greater potential for price appreciation.

Washington's Marriott Corp. a former glamor stock, is a example of a firm taking precautions to fight potential takeover bids, should they develop. Although Marriott officials long have insisted they have no interest in having their firm acquired by any other comapny, management is asking stockholders to ratify this intention at the annual meeting in Gaithersburg. Md., on Nov. 15.

Mariott's shareholders will be asked to boost to two-thirds the number of votes necessary to approve any merger, acquisition or reorganization. Marriott's stock price currently is depressed, by historic standards, which could encourage a takeover bid.

"In general, the less researched companies, which might be expected to be less efficiently priced, have outperformed larger capitalizations and more intensively researched companies," Drexel Burnham's Baker said. He added that this is not only true for 1977.

According to a comprehensive new study on stock returns for the last 50 years, these less researched companies have provided substantially higher returns for any period beginning between 1929 and 1944 and ending last year.

That new study, which is just now becoming available, is called "A Half Century of Returns on Common Stocks and Bonds; Rates of Return on Common Stocks and United States Treasury Securities, 1926-76." Its authors are two proffessors at the University of Chicago Graduate School of Business, Lawrence Fisher and James H. Lorie, both experts on securities pricing theory.

The book is a more comprehensive updating of a previous tabulation of returns. Its voluminous statistics should provide endless material for do-it-yourself stock market theoreticians.

One of the more startling conclusions to be drawn from its tables goes a long way toward excusing investors who are completely gunshy about the current stock market:

The average rate of return on a value-weighted portfolio of all common stocks listed on the New York Stock Exchange from Dec. 31, 1972, to Dec. 31, 1976, was minus 6.2 per cent (deflated) per annum compounded annually. That decline is just below the experience of the Great Depression When NYSE common stocks had an average annual rate of return of minus 6.6 per cent (deflated) from the end of 1929 to the end of 1933.