5-Star Stocks Begging to Be Bought

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"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
-- Warren Buffett

Can't argue with that, can you? I don't need to remind you of how much fear is in the market these days. It's a real gut check, but that fear is creating incredible opportunities for investors patient and diligent enough to search for the babies thrown out with the bathwater.

Using our Motley Fool CAPS ranking system's screening tool, I scanned for bargain companies with the following characteristics:

• Five-star ratings from our 125,000-member CAPS community.
• Trailing dividend yields of at least 3% -- and preferably much higher.
• Price-to-book ratios no greater than 1.
• Dreadful performance over the past 26 weeks. Yes, most stocks meet this condition, but I'm looking for the big crashers. The mothers and fathers of all bargains.

Among others, I dug up these five, which have been shredded to such paltry levels that it's hard to keep ignoring 'em:

Company	26-Week  Price Change	Dividend  Yield	Price/Book Ratio	2009 Earnings Estimates
Atlas Energy Resources (NYSE: ATN)	(58.1%)	16.6%	0.98	$2.25
Himax Technologies (Nasdaq: HIMX)	(54.6%)	32.8%	0.68	$0.27
Ingersoll-Rand (NYSE: IR)	(51.8%)	4.0%	0.53	$2.02
Ternium (NYSE: TX)	(67.7%)	4.5%	0.40	$2.21
Pengrowth Energy (NYSE: PGH)	(46.9%)	18.4%	0.94	N/A

Data from Motley Fool CAPS and Yahoo! Finance as of Jan. 29, 2009. TTM = Trailing 12 months.

None of these are necessarily recommendations -- just good starting points for you to dig a little deeper. You can rerun this screen, if you like.

Yes. It's real.
When coming across spectacular dividend yields, investors are wise to check whether they're too good to be true. They usually are. It's that whole "no free lunch" thing.

Well, I have good news. Sort of. The absurd yields that can be had on Canadian energy trusts like Pengrowth Energy, as well as competitors like Baytex (NYSE: BTE) and Harvest Energy (NYSE: HTE), are legitimate. For now.

These dividend gushers will keep paying sizable monthly distributions until the Canadian tax code partially crashes the party in 2011. Until then, investors are feasting on some of the fattest yields around. The monthly distribution announced so far in 2009 on Pengrowth's U.S.-listed shares equates to a dizzying 18.4% annualized yield.

Now, yields could ebb if global energy prices keep swan-diving. At the rate the economy's been tanking, that seems fairly likely. Thankfully, shares have been hammered so badly that today's prices almost fully reflect that happening and then some. CAPS player ZachGruver explained this scenario back in November, writing:

The both main attraction and main fear of this company is their distribution levels. Right now they are yielding close to 20%, and many see that as a big caution sign. ... I think that yes, prices have declined and they may cut their distribution based on a weaker 2009 outlook, but only by ten or twenty percent. But even if they do that it will not be to the end of the year and Pengrowth will still yield 16%-17%.

To be sure, expecting long-term payouts of 16%-17% is probably a bit optimistic. Let me reiterate, yields will likely sink if the assault on energy prices continues, and will certainly come down in 2011 as new tax laws are implemented. This isn't a Ron Popeil "buy it, set it, and forget it" stock.

Then again, let's be real here: With an 18.4% payout, yields can be dramatically slashed while still leaving Pengrowth no less than a dividend rock star. The impending pain seems to already be baked into the share price, yet the monthly distributions are still flowing strong. Manage your expectations accordingly, and enjoy it while it's here, Fools.

You take it from here
Disagree? See it from another angle? Just want to see what the rest of the pack is saying? More than 125,000 investors use CAPS to share ideas and swap opinions. Click here to check it out. It won't cost you a dime.

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