Bring On the Recession!

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Editor's note: The original version of this article incorrectly stated that Siliconware Precision Industries' P/E was 169. Using U.S. GAAP and ADS sharecount, the P/E is 25. We regret the error. 

Why am I wearing a hang-dog face? Well, I'm seeing some depressing news lately:

• Real wages for workers rose nearly 1.6% in this past June.
• There were some 132,000 new jobs added in June.
• The unemployment rate is holding steady, around 4.5%.
• Coca-Cola (NYSE: KO) CEO Neville Isdell recently said, "I don't see a recession in the United States."

I know that numbers like those can be interpreted in many ways, and the picture isn't necessarily as rosy as it might appear. Still, darn. I know it's counterintuitive for many people and I occasionally have to remind myself of this, as well, but ...

Falling stocks are good for those with new money.

The bad-news bandwagon
You see, there's an upside to a recession. There's a reason to root for one. Stocks aside, recessions can bring about a lowering of the inflation rate, which will preserve the value of our money a little better. Recessions can also drive interest rates down. This can be excellent for those who want to borrow -- say, to buy a home.

But let's get back to stocks.

If you're at a point in your life where you're regularly generating new money to invest, a slumping stock market simply means that more stocks are on sale. What could be better? As long as you plan to remain invested for many years, such purchases will serve you well.

Finding contenders
There are lots of companies that interest me as possible investments, but many times, it seems that too many great companies aren't priced attractively. A nice little recession -- preferably lasting no more than a year -- can bring those prices down.

For example, below are some companies I found when I screened at Yahoo! Finance. I was looking for net profit margins above 20% (levels suggesting that the stocks have pricing power, among other things) and expected earnings growth over the coming five years of 10% or more (a rate suggesting that the stocks are expanding at a decent clip). But they also turned out to have premium price-to-earnings (P/E) ratios. A little downturn could give us a nice opportunity to buy shares of these companies on the cheap:

Company	Net Profit Margin	Expected Earnings Growth	P/E
Google (Nasdaq: GOOG)	29%	35%	47
Adobe Systems (Nasdaq: ADBE)	21%	14%	43
Genentech (NYSE: DNA)	24%	28%	34
Infosys Technologies (Nasdaq: INFY)	28%	26%	35
Siliconware Precision Industries (Nasdaq: SPIL)	23%	18%	25

It could still happen
Despite today's many rosy outlooks, a recession could still happen in the near future. One trigger could be a massive slowdown in China. Another could be if Americans suddenly started spending less and socking lots more money away for their golden years. And then there's the big question mark surrounding the U.S. housing market. Oh, yes, and the rising price of oil.

If that's not enough for you, note that Morgan Stanley's economists have recently warned of a likely global recession in around two years, accompanied by a sizable stock market correction -- thanks to rising interest rates and inflation.

So expect a recession -- sometime. And when it happens, don't dump many of your shares in despair, as lots of people do. Instead, start hunting for bargains.

But if you can't wait for a recession and want to get started hunting for bargains now, I invite you to test-drive our Motley Fool Inside Value investing service free for 30 days. Its picks -- all of which were recommended when the stocks were trading for less than their intrinsic value -- were recently beating the S&P 500 31% to 23%. Click here for more information.

Longtime Fool contributor Selena Maranjian owns shares of Coca-Cola, which is a Motley Fool Inside Value recommendation. The Motley Fool is  Fools writing for Fools.