5-Star Stocks Worth a Look

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Despite the fierce rally, you can still find high-quality companies at great prices. Watch a few minutes of CNBC. Read a few blogs. Talk to a few opinionated people. There's no doubt about it: Fear's still easy to find. And that's great news for Fools on the hunt for great investments.  

Using our Motley Fool CAPS ranking system's screening tool, I scanned for a few five-star-rated companies -- the highest our CAPS community offers -- that might aid your bargain-hunting ambitions. Have a look:

Company	Recent Price	TTM Return on Equity	Forward P/E Ratio
Johnson & Johnson (NYSE: JNJ)	$62.89	26.6%	12.8
Portfolio Recovery (Nasdaq: PRAA)	$45.36	14.3%	13.1
Philip Morris International (NYSE: PM)	$49.99	69.7%	13.1
Verizon (NYSE: VZ)	$31.63	11.8%	12.7

Data from Motley Fool CAPS and Yahoo! Finance, as of Nov. 29, 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 Philip Morris International
Looking for a reason to buy tobacco giant Philip Morris International? I've got five.

1. The American company that isn't
For all intents and purposes, this is a full-on international company selling an American product. After being spun off from Altria (NYSE: MO) nearly two years ago, Philip Morris International, as the name implies, is solely the global operations of what used to be the Philip Morris dynasty -- driven strongly by the Marlboro brand.

Region	Percentage of 2008 Sales
European Union	45.4%
Eastern Europe, Middle East, and Africa	29.9%
Asia	19.7%
Latin America & Canada	5.0%
Total	100%

If you're looking for international exposure, but fear the dangers of investing in international companies whose business operations are as foreign to you as the location of their headquarters, this is a company for you.

2. You hate it
Cigarettes kill people. That's terrible. And it labels this company a "sin stock" that plenty of investors avoid based on moral objections. No one can blame them.

But frankly, heart attacks kill people, too, and few people throw stones at Hershey (NYSE: HSY) or McDonald's (NYSE: MCD). Furthermore, "sin" stocks tend to reward shareholders quite well. Why? As was the case with former parent company Altria, public loathing kept its share price relatively low, and hence its dividend relatively high, for decades on end. Those who reinvested those dividends back into the company saw Altria become the highest-returning stock over the 50 years preceding 2007. A cash-cow company that everyone hates can be a wonderful thing.

3. They love to smoke
Many countries in which Philip Morris International operates smoke at far higher rates than here in America. In Russia, the smoking rate for men is more than 60%. Same in China. Ukraine and Turkey have roughly 50% smoking rates for men. In the U.S., it's roughly 19%. Sad it may be, but the fact remains that smoking is big, big business in these countries.

4. It's cheap
Average analyst expectations call for Philip Morris International to grow more than 11% per annum for the next five years. When you compare that with a stock trading at about 13 times next year's earnings, valuation is hard not to like. Add in a 4.6% dividend, and you're being highly compensated for a business that isn't prone to outsized risk.

5. Our CAPS community loves it
Of the 2,032 CAPS investors rating this company, more than 98% rate it as an "outperform." One of them is CAPS member 3dollarhedgefund, who writes:

[Philip Morris International] is well-positioned to capitalize on the increased spending power of consumers in emerging economies, where smoking is more prevalent and socially acceptable than in the U.S. and where cigarettes are highly desirable products, with brand loyalty and, in some cases, the social cachet attaching to imported tobacco products providing the opportunity for high margins.

You take it from here
Have your own take on Philip Morris International? More than 145,000 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.

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