"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 is in the market these days. It's a real gut check, but 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 the year ahead.
  • Terrible 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 being valued like total losers.

Here are a few of the stocks I found:


Price Change

Recent Price

Forward P/E Ratio

Chesapeake Energy (NYSE:CHK)




Chicago Bridge & Iron (NYSE:CBI)




Morningstar (NASDAQ:MORN)




Schlumberger (NYSE:SLB)




Waste Management (NYSE:WMI)




Data from Motley Fool CAPS and Yahoo! Finance, as of July 21, 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.

A closer look at Waste Management
People like exciting investments. During the late '90s, this meant dot-coms. Then it was housing. Then solar. Then oil. In any case, people chase what's super-fun to talk about, and potentially on the verge of doing great things. They want big gains today. That's all part of investors' tendency to flock toward short-term thinking.

But time and time again, we see that the best long-term investments aren't necessarily the Microsofts (NASDAQ:MSFT) and Googles (NASDAQ:GOOG) of the world. They're the simple, no-frills, cash-cow businesses that are beyond boring, but provide moderate but stable returns year after year. Waste Management is one of 'em.

What makes Waste Management great is fairly simple:

  • Its main line of work -- trash collection -- is capital-intensive. These high barriers to entry make a wonderful moat for keeping rivals away. Competition is repelled because it's quite hard to distinguish yourself in this industry based on anything but price. People want their trash off their curb, and nothing else.
  • Those barriers to entry provide pricing power. In this economy, that's worth its weight in gold.
  • The nature of the business makes it fairly recession-proof.
  • The utter dullness of this industry gives it a low investment profile, which is great. Let investors go nuts over exciting industries. Waste Management investors are too busy collecting dividends to get caught up in any sort of hype. The less attention, the better.

All these qualities add up to make Waste Management a consistently solid investment: big moat, huge cash flow, and an industry that isn't subjected to rampant innovation. Best of all, it's trading at a relatively attractive price that provides a 4.1% dividend. Here's how CAPS member btown819 put it:

This is a garbage stock. No, wait... it's a garbage company. What I mean to say is that it's a good company in the garbage business. It's a large dominant player in a mature industry that would probably be characterized as an oligopoly of some sort. It seems like a fair company at a fair price ... It should be a decent market performer over the long-term.

Your turn to chime in
Have your own take on Waste Management? More than 135,000 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 doesn't owns shares in any of the companies mentioned in this article. Google is a Motley Fool Rule Breakers recommendation. Morningstar is a Motley Fool Stock Advisor pick. Chesapeake Energy, Microsoft, and Waste Management are Motley Fool Inside Value recommendations. Waste Management is a Motley Fool Income Investor pick. Chicago Bridge & Iron is a Motley Fool Global Gains selection. The Fool owns shares of Chesapeake Energy and Morningstar. Its disclosure policy is too proud to beg.