3 Stocks That Just Make Sense

"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 -- not to mention Long-Term Capital Management and many other examples -- too much complexity can often end in calamity.

In an effort to track down some of the companies that may fall into that "fish in a barrel" category, I've 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 12%, and have been highly rated by the CAPS community.

Source: CAPS.

These are just three of the results that the CAPS screener spit out, but 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 to start some further research. And on that note, let's take a closer look at each company.

An energy giant
As fellow Fool Rex Moore recently pointed out, Petrobras is unlikely to be one of the very best performing stocks over the next decade. Although it's still a bit smaller than PetroChina (NYSE:PTR) and a good deal smaller than ExxonMobil (NYSE:XOM), it's nonetheless a huge company and unlikely to outpace small up-and-comers. But that doesn't mean we can't expect solid returns -- case in point, the stock has more than doubled from the lows it hit back in November.

I was skeptical of oil prices when they were $100 a barrel and beyond, but it wasn't because oil bulls didn't have a plausible story. I do believe that we're going to see steadily growing demand as available reserves become harder to secure, but at today's relatively low prices, the oil story seems far more interesting to me. Combine the potential for higher prices with Petrobras' dedication to making significant investments to increase reserves, and you’ve got two key ingredients to success.

Zeroing in on Petrobras, CAPS member dudemonkey recently became one of the 3,500 CAPS members who are bullish on Petrobras, noting:

Petrobras is the largest Brazilian company and is a world-leader in offshore oil extraction. They have a technological advantage over most other oil companies in this respect and have recently discovered billions of barrels of offshore oil in their waters. ... This is the company that put Brazil on the investment map and there is no reason to expect Petrobras to relinquish that leadership role in Latin America.

The chemicals that feed us
As far as essential products go, it doesn't get much simpler than food. And when it comes to food, fertilizer is crucially important. How important, you ask? Well, according to Mosaic competitor PotashCorp (NYSE:POT), 40% of the world's food is a direct result of the use of fertilizer.

Like oil prices, the prices for Mosaic's primary outputs -- phosphates and potash -- have come down from previous highs. But also like oil, there's a compelling story behind the growing need for fertilizers. The world population is growing rapidly, arable land is shrinking, and as consumers in emerging markets get wealthier, they're driving the need for more and higher-quality crops.

Recent results may not have been stellar -- or even decent -- but nearly 2,500 CAPS members like the long-term picture at Mosaic. CAPS All-Star stan8331 is one of those bulls and recently pieced together a case for Mosaic: "Low debt, good cash flow, low P/E, people have to eat and crops have to be grown to that end, even in bad times."

Health-care fortress
Talk about a stock that just makes sense -- I feel like I can practically just say "Johnson & Johnson" and be done with it. Financially, the health-care giant is still one of the strongest in the world -- unlike former AAA club member GE (NYSE:GE). It produces an endless number of products that customers depend on whether we're in a recession or not. And with a 3.6% dividend that's unlikely to take a hit and an earnings multiple of just over 11, the value seems pretty enticing.

CAPS member follsgold09, one of the 11,000-plus members who have given J&J a thumbs-up, laid it out nice and simply: "I don't think you can go wrong with this stock. Company is diversified and has plenty of cash on hand. Also pays a great dividend."

Getting down to business
Now the CAPS community wants you. That's right: Do you think these stocks make sense? Or is the community off-base in its faith in these companies? Head over to CAPS and join the 130,000 members who are already sharing their thoughts on thousands of stocks.

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