Dream Stocks for Value Investors

• Email
• Share
• Print

Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and discover the 10 best stocks of the past decade. But I'm more interested in the tools that can help me evaluate tomorrow's greatest companies.

Motley Fool CAPS offers a variety of resources for that. Our community of 140,000-plus members is full of investors helping one another beat the market.

With the recent rally in the markets, it's getting tougher and tougher to get great stocks at a good price. We can use CAPS to quickly screen for value companies, though, then get the story behind some of its more highly rated stocks. CAPS' nifty screener will help us find stocks with:

• A market cap of at least $1 billion.
• A long term debt-to-equity ratio of less than 0.5.
• A current ratio of at least 1.
• A price-to-earnings ratio of less than 15.

Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.

Opinions with the numbers
Below is a sampling of stocks the screen returned. You can run this screen yourself -- remember that your results may differ from ours as the market changes.

Company	P/E Ratio	LT Debt-to-Equity Ratio	CAPS Rating (out of 5)
GameStop (NYSE: GME)	10	0.19	****
ExxonMobil (NYSE: XOM)	11.7	0.07	****
Bucyrus (Nasdaq: BUCY)	13.5	0.4	****

Data and star rankings from CAPS as of Nov. 13.

Game on!
Many CAPS members like GameStop's long-term prospects and how the business model has held up well in this economy -- one that is pressuring the video game industry. Despite weaker game sales in October, investors anticipate that big-name launches will help boost sales this quarter: Activision Blizzard's Call of Duty: Modern Warfare 2 recently broke Take-Two Interactive's (Nasdaq: TTWO) record for biggest video game launch. And GameStop expects business to be strong next year. In addition to being the leader in video game retail, the company is looking to expand its reach by offering digital upgrade downloads for games, together with console makers like Microsoft (Nasdaq: MSFT) and Sony. That could also help drive new streams of revenue. When taking a headcount in CAPS, 95.5% of 3,194 members rating GameStop expect it to outperform the market.

My name is oil
Just like peers ConocoPhillips (NYSE: COP) and Chevron, ExxonMobil's earnings have fallen significantly this year as energy prices work their way back up. Still, many CAPS members look to the future favorably for the energy giant and "Big Oil." The company has a rock-solid balance sheet and a track record of raising its dividends every year for 27 consecutive years, and is consistently successful in replacing its production. Some investors like the long-term view for energy demand and feel that ExxonMobil would benefit because it's one of the best-positioned, well-run companies. In CAPS, 93% of the 6,802 members rating ExxonMobil are bullish.

Mine, mine, all mine!
Orders have increased recently for mining equipment maker Bucyrus, leading it to raise its 2009 revenue guidance, and it expects improving demand for its original equipment business. Stronger commodities prices have brought increased investor optimism to mining equipment makers like Bucyrus and Joy Global (Nasdaq: JOYG) lately, and many CAPS members have a bullish long-term view on drilling and mining. Not everyone is on board this coal train -- with Bucyrus' big gains in recent months, it's leaving value territory pretty quickly, and some investors think there are better value plays in the sector. Still, 97.1% of the 1,046 CAPS members rating Bucyrus see it beating the broader market.

Let 140,000 members be the jury
The collective wisdom of a huge pool of investors can help give context to a page of numbers from a stock screen. But individual investors are still the best judges of what to do with their own money. Fools should always perform their own due diligence.

Happily, it's easy to chime in with your own opinion. If you agree that these companies present dream opportunities -- or see more of a nightmare instead -- simply scroll down and add your thoughts in the comments box.