Fearful Stocks for Greedy Investors

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."
 -- Warren Buffett

Of all the Oracle of Omaha's orations, this one holds a special place in Foolish investors' hearts. When looking to bag a bargain, a panicked sell-off by jittery investors offers you a great chance to snap up stocks on the cheap.

In the short term, professional traders' pessimism can become a self-fulfilling prophecy. Desperate institutions lower their asking prices to get rid of a stock, prompting buyers' bid prices to fall in tandem, creating the very price decline that both sides feared in the first place -- until the selling stops.

Until it does, savvy investors can "get greedy," snapping up bargains from these fearful sellers. (Assuming they really are bargains.) In today's column, we'll see which stocks Wall Street's motivated sellers are most frantic to unload -- and whether you should buy 'em:

Companies are selected from the "Institutional Ownership Down Last Month" list published on MSN Money after close of trading on Friday. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
Up on Wall Street, the pinstripe and wingtip crowd can't sell these stocks fast enough. Down here on Main Street, though, a lot of Fools are happy to take the other side of that trade. They're convinced that many of these shares present compelling bargains, and none more so than Complete Production Services.

Never heard of it? Don't be embarrassed. Until recently, this small-cap oil services operator had slipped under my radar as well. But then again, you often find your best bargains among the market's unloved and unsung stocks. And Fools who have heard of CPS believe this one's a winner. Here's why.

The bull case for Complete Production Services
As far back as 2007, CAPS member jerry1027 had CPS pegged for outperformance, calling the company "well positioned to take advantage of the increased exploration and drilling going on here in the North American Continent."

CAPS member giolitti points out that CPS is "Highly leveraged to activity in the shale gas plays" by companies like Chesapeake Energy and ExxonMobil's (NYSE: XOM) new prize, XTO Energy (NYSE: XTO). "A rebound in Nat Gas prices will push this stock toward the high teens."

With natural gas having just hit a hard bounce last week, "Time to buy is now," says CAPS All-Star cecamadocv.

I agree.

Digging into the numbers
And not just because I think gas prices are going up, either. In fact, even if they don't, my review of Complete Production's numbers has me feeling quite bullish about the company's future.

You see, while others might be (and Wall Street apparently is) frightened by Complete Production's lack of "profit" -- as calculated under generally accepted accounting principles (GAAP) -- the fact is that most of the company's losses can be attributed to noncash charges taken to restructure and write down assets. Meanwhile, the company's cash flow statement shows that it generated nearly $248 million in free cash flow last year.

With the stock currently trading for only $891 million, that means we're looking at a company priced at less than four times free cash flow. To me, this seems plenty cheap for the 7% annual growth that analysts expect CPS to produce over the next five years.

And what if our CAPS members are right? What if natural gas prices do turn solidly up, buoying the fortunes of the companies that pay for Complete Production's services? … Why then, Fools, the sky's the limit.

Time to chime in
Of course, that's just my opinion. I could be wrong. If you think I am, feel free to pop my bullish bubble. Click over to Motley Fool CAPS now and tell me why I'm wrong.

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