"I will tell you how to become rich. 
Close the doors.
 Be fearful when others are greedy.
 Be greedy when others are fearful."
 -- Warren Buffett      

Can't argue with that, can you? I don't need to remind you of how much fear permeates the market these days. Despite the gut check, that fear is creating opportunities for investors patient and diligent enough to search for the babies thrown out with the bathwater.

Using our Motley Fool CAPS ranking system's screening tool, I scanned for bargain companies with the following characteristics:

  • Five-star ratings -- the highest our CAPS community offers.
  • Estimates of profitability in 2009.
  • Horrific performance over the past 52 weeks. Yes, almost every stock meets this condition, but I'm looking for the bargain opportunities -- solid companies with great outlooks that are nonetheless valued like losers.                     

Here's what I found:


Price Change

Recent Price

2009 Earnings Estimates

Corning (NYSE:GLW)




Johnson & Johnson (NYSE:JNJ)




Procter & Gamble (NYSE:PG)




Southern Copper (NYSE:PCU)




Titanium Metals (NYSE:TIE)




Data from Yahoo! Finance, as of April 23, 2009.

None of these are necessarily recommendations -- just good starting points for you to dig a little deeper. You can rerun an update of this screen yourself, if you like.

Stellar company, great price
Procter & Gamble has historically traded at a premium multiple for a good reason -- it's one of the greatest companies in the world. The owner of everything from Crest toothpaste to Duracell batteries has its tentacles in the lives of billions of consumers around the world. Better yet, most of its products are classified as "nondiscretionary," so the impact of a synchronized global recession isn't nearly as painful as it is for other consumer-focused companies like, say, Best Buy (NYSE:BBY).

That stable, predictable demand stream is worth its weight in gold. As CAPS member UncleSkell recently wrote:

The best thing that anybody's said about this company is that it's "boring". The worst thing that anybody's said is it's "stable" ... Charmin, Duracell, Pringle's...nobody is going to stop buying this stuff (probably at the [Wal-Mart (NYSE:WMT)].... I like the dividend, I like the ROE, and I like the income per employee.

Shares currently trade at about 12 times forward earnings estimates, which is spectacularly low for this kind of company. Just how low? Since 1992, shares have traded at an average of 26.2 times normalized earnings. Now, you could argue the entire post-1992 period was a speculative bubble, but the idea is still valid: Investors pay a premium for quality and consistency -- a trait that's hardly reflected in today's share price.

More of the same
Johnson & Johnson is a similar story. After losing nearly one-fourth of its value over the past year, shares now trade at around 11 times forward earnings. Not unlike Procter & Gamble, stability and predictability are the real allure here. As CAPS member STOCKBUSTER1 recently wrote:

The vast array of products made by [Johnson & Johnson] and their distribution to other countries as well as our own make this stock a winner for the long term. Somebody somewhere is using a [Johnson & Johnson] product right now, and doesn't let the recession have any influence on that choice. Great dividend with an EPS more than twice the dividend so it should be safe. Also good growth rate is expected going forward.

Speaking of that dividend, shares currently yield a fat 3.6%. With a 39% payout ratio on a dividend that's been raised consistently since 1972, that's a lot of cash for not a lot of risk.

Your turn to chime in
What do you think about either of these two? More than 130,000 investors use CAPS to share ideas and swap opinions. Click here to check it out and speak your mind. It's 100% free to participate.

For further Foolishness:                                          

Fool contributor Morgan Housel owns shares of Procter & Gamble. Best Buy and Titanium Metals are Motley Fool Stock Advisor picks. Best Buy and Wal-Mart Stores are Inside Value selections. Johnson & Johnson and Procter & Gamble are Income Investor picks. The Fool owns shares of Procter & Gamble and Best Buy, and has a disclosure policy.