3 Stocks That Just Make Sense

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"I like to go for cinches. I like to shoot fish in a barrel. But I like to do it after the water has run out."
-- Warren Buffett

History seems to show that good investing doesn't necessarily mean picking out complex situations and basing your investment thesis on Nobel-level math. In fact, as the current financial crisis has shown us, too much complexity can often end in calamity.

To track down companies that may fall into that "fish in a barrel" category, I turned to The Motley Fool's CAPS community. Using CAPS' stock screener, I looked for companies that have a price-to-earnings ratio below 15, a long-term debt-to-equity ratio below 50%, a return on equity above 10%, and a high rating from the CAPS community.

Company	CAPS Rating (out of 5)	Price-to-Earnings Ratio	Return on Equity	Long-Term Debt-to-Equity Ratio
Atwood Oceanics (NYSE: ATW)	*****	9.1	26.3%	24%
Dawson Geophysical (Nasdaq: DWSN)	*****	10.6	10.8%	0%
Mechel (NYSE: MTL)	****	7.7	28.3%	7%

Source: CAPS.

These are just three of the results that the CAPS screener spit out; you can run the same screen yourself to see the rest of the companies that made the cut. While the three companies above aren't meant to be formal recommendations, they are a good starting point for further research. And on that note, let's take a closer look at these companies.

Offshore opportunity
The CAPS community is clearly partial to offshore oil drillers, and there's good reason.

Drillers have no control over the wacky moves that oil prices have been making. However, saying that oil will continue to be in high demand is like saying that the sun will rise tomorrow. And the continued search for new oil means that offshore drillers' expertise in tapping Poseidon's realm will keep them in high demand.

With just nine rigs, Atwood is much smaller than industry big boys like Transocean (NYSE: RIG) and Noble (NYSE: NE). But with a manageable balance sheet and working relationships with global majors like Chevron (NYSE: CVX) and Hess, this driller is definitely an up-and-comer.

A seismic opportunity?
Dawson's specialty is creating subsurface maps that help its oil and gas exploration clients figure out where they should be drilling. As you might guess, Dawson faces the same challenge as Atwood: When energy prices start falling, interest in searching out new fields starts to wane.

But also like Atwood, Dawson provides good reasons to look past energy price volatility. For one, the company has a leadership position in seismic data acquisition in the continental U.S. Dawson also has a downright beautiful balance sheet, with nearly $50 million in cash and short-term investments, and not a lick of debt. And while customer concentration could be a concern, the company has staked out major customers like Chesapeake Energy (NYSE: CHK).

And getting back to those crazy energy prices, if you're on the same page as my fellow Fool Austin Edwards, then you believe the eventual turnaround in natural gas prices could be a major boon for Dawson.

Steel, and coal, and Russia -- oh my!
Pretty much any business that fed the growth of BRIC member Russia prior to the global economic crisis was a good place to be. Then came the mighty unraveling that sent stocks like Mechel tumbling.

Today, however, things are starting to look a bit brighter. In Mechel's recent report on third-quarter operating conditions, management said that many of its businesses are seeing utilization rates at precrisis levels. And investors have certainly logged a vote of confidence, sending shares soaring more than 500% from their 2009 low.

CAPS members have had a similarly optimistic outlook, giving the stock four stars out of a possible five. CAPS member WHOinvestor became a Mechel bull back in June, and highlighted a sunny longer-term picture for the Russian economy:

... the Russia that emerges from this credit crisis will be in a far better position than the one that went in. The Kremlin has taken control of its currency, acquired the country's most savvy international business people, and has already used those new assets to begin managing the political connections it will need to get the most out of its natural resources in the coming energy crunch.

There's too much relief in the air, too much anticipation of recovery, and too many smart investors on to the new teamwork happening between private companies and the Kremlin.

Getting down to business
Now the CAPS community wants you. Do you think these stocks make sense? Or is the community off base in its faith? Head over to CAPS and join the 140,000 members already sharing their thoughts on thousands of stocks.

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