5-Star Stocks Begging to Be Bought

"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 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 -- the highest our CAPS community offers.
  • Estimates of profitability in the year ahead.
  • Terrible performance over the past 52 weeks. Yes, almost every stock meets this condition, but I'm looking for the bargain opportunities. Solid companies with great outlooks that are being valued like total losers.

Have a look:

Company

52-Week 
Price Change

Recent Price

Forward P/E Ratio

ArcelorMittal (NYSE: MT  )

(52%)

$37.62

14.25

Burlington Northern Santa Fe (NYSE: BNI  )

(20%)

$78.31

13.96

ConocoPhillips (NYSE: COP  )

(45%)

$45.25

7.86

PepsiCo (NYSE: PEP  )

(16%)

$56.34

13.98

Procter & Gamble (NYSE: PG  )

(13%)

$55.78

14.84

Data from Motley Fool CAPS and Yahoo! Finance, as of July 27, 2009.

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

A closer look at Pepsi
What's better than a world-class growth stock? A world-class growth stock so cheap that it sports 3.2% dividend. And that's what you'll get today with PepsiCo.

When most investors talk about Pepsi, a comparison to Coca-Cola (NYSE: KO  ) brews. Which one's cola tastes better; which one's Super Bowl commercials draw more attention; which one is more likely to make your stomach explode when mixed with Pop Rocks. It's a fierce rivalry.

In truth, both Pepsi and Coke are wonderful companies that share somewhat of a cola duopoly. They have brand-name dominance and a cult following most companies can't dream of. And both companies trade at fairly attractive valuations, with similar 3%-plus dividend yields and forward earnings multiples of about 14.

One thing that does set Pepsi apart from Coke is its diversity. Coke is a global juggernaut zeroed in on beverages, whereas Pepsi expanded its horizons to become a diverse snack-food company. Besides its famous sodas, Pepsi is home to Gatorade, Quaker Oats, Tropicana, Doritos, Fritos, and Lay's chips, to name a few brands. Here's how CAPS member TMFActionJackson put it earlier this year:

People gotta eat & drink even in a recession right? Sure they can get the Faux cola if they want, but you can't let your friends see you drink it.

So Pepsi is diversified outside of just domestic beverages, it is a leader in the snack industry with tons of well known brands such as FritoLay, quaker, gatorade, sobe, aquafina & [Starbucks (Nasdaq: SBUX  ) ] packaged beverages.

The brands are expanding in to healthier alternatives of their products such as baked lays & tostitos, as well as the flat earth brand for people who are willing to drop more coin for their health.

This stock is taking a hit with the rest of the economy to the point where we are at a very attractive dividend yield. So, I'll take the dividend and the growth prospects, thank you very much.

No, thank YOU very much
Have your own take on Pepsi? More than 135,000 investors use CAPS to share ideas and swap opinions. Click here to check it out and speak your mind. It's 100% free to participate.

For related Foolishness:                                                                        

Fool contributor Morgan Housel owns shares in Procter & Gamble. Starbucks is a Motley Fool Stock Advisor recommendation. The Coca-Cola and Starbucks are Motley Fool Inside Value recommendations. The Coca-Cola, Pepsico, and Procter & Gamble are Motley Fool Income Investor recommendations. The Fool owns shares of Procter & Gamble and Starbucks and has a disclosure policy.


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