America's Next Top Value Stock

Though value investors have been some of the most successful investors out there, finding good stocks at bargain prices is far from easy. Though markets aren't as efficient as some university professors may want to tell you, they generally do a pretty good job pricing stocks. So while there are good deals out there, you're going to have to break a bit of a mental sweat if you want to make sure you're investing in the stock equivalent of Brad Pitt, not Kato Kaelin.

Fortunately for us, in the search for stock market values, we have the 165,000-plus members of The Motley Fool's CAPS community voting on which stocks are true stars and which are just posers. To gather some ideas, I've dug up a handful of companies valued at less than twice their book value -- a measure often used by value investors.

Source: Yahoo! Finance and CAPS as of May 25.

As you can see, though these stocks all carry value-like multiples, the CAPS community obviously doesn't think that all are worthy of your investment dollars.

No twinkle in these stars
It's hard to say what there is to like when it comes to Alcatel-Lucent. From a purely financial perspective, the company is an utter wreck. It hasn't produced annual positive free cash flow since 2006, it hasn't recorded an annual accounting profit since 2005, and it's swimming in a troublesome amount of debt.

Working in an industry that includes Cisco (Nasdaq: CSCO) and Nokia Siemens, it's also hard to imagine that the competitive environment is going to get any easier. Despite the low valuation, the low rating that CAPS members have given this stock seems pretty on-target.

Motorola isn't in quite the same boat as Alcatel-Lucent, but its performance hasn't wowed anyone lately either. The interesting thing about Motorola, though, is the fact that the company is going to split in two in 2011. The split will create one business with mobile phones and home products and another with the enterprise mobility and networking products.

That split could suddenly create an opportunity that has "Motorola" in its name. While the average Joe on the street knows Motorola for its mobile phones, that is arguably the company's worst division. To put it bluntly, it's pretty craptastic. It was the only segment that was unprofitable in the first quarter, and it's an also-ran in a market that's increasingly dominated by powerhouses like Apple and Research In Motion (Nasdaq: RIMM).

However, Motorola's enterprise mobility and networking groups are far more interesting. Both were profitable for both the first quarter and 2009, both sport solid margins, and between the two, you can actually find some areas of market leadership. That said, until the separation takes place, it's hard to get too excited about the combined business.

And finally, despite the recovery in the financial sector, "bank" has remained a nasty four-letter word for many investors. The sector as a whole hasn't been looked too kindly upon by the CAPS community, though when it comes to U.S. banks, they appear to be more ready to warm back up to the big banks than their smaller competitors. Both Bank of America and Citigroup join Wells Fargo at the three-star level.

A five-star is born!
Now that we've left the riffraff behind, we can move onto a stock that CAPS members think is worthwhile: Disney.

Disney is one of those companies where you don't really have to debate whether it's a good company. It owns ABC; its television production studio has churned out hits like Lost, Grey's Anatomy, and Desperate Housewives; it owns cable channels ESPN and The Disney Channel; it has its worldwide collection of theme parks; it produces movies under the Walt Disney, Pixar, and Touchstone banners; and just last year, it acquired superhero treasure-trove Marvel. And that doesn't even cover the whole of it. The Disney brand has also been ranked in the top 10 worldwide by Interbrand.

The company did have some struggles early in the decade under former CEO Michael Eisner, but in recent years, the strength of the underlying business has proven that you can't keep a good mouse down.

But as good as Disney is, it just didn't have what it takes to top this week's top value stock, Motley Fool Hidden Gems pick Brookfield Infrastructure Partners.

On a scale of excitement, Brookfield manages to crank it all the way down to one. If you have trouble sleeping at night, Brookfield's annual report might be a better solution than Ambien. The company owns a collection of titillation-free assets like electricity transmission assets, sea ports, and timberlands.

Of course, nobody ever said that an investment has to be exciting to make you money, and Brookfield's 7.2% dividend yield might be about as exciting as it gets for dividend investors.

On CAPS, the company has collected nearly 700 outperform ratings, versus a mere six underperforms. CAPS member GoldenTara added an outperform rating in late April, saying:

This is a solid company which is also a kind of inflation hedge. It has global diversification and a wide moat around it. Add to this a low debt/equity ratio. P/E under 15 is still low and ownsership interest of a proven player like [Brookfield Asset Management] is an icing on the cake.

Make your vote count!
Do you agree that Brookfield Infrastructure Partners could be America's next top value stock? Click over to CAPS and let the rest of the community know what you think. And while you're there, you can log your vote for the other stocks that you think should be in the running.

What's better than an outperformer? An outperformer that nobody else knows about.