Fearful Stocks for Greedy Investors

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Of all the Oracle of Omaha's orations, this one holds a special place in Foolish investors' hearts. When looking to bag a bargain, a panicked sell-off by jittery investors offers you a great chance to snap up stocks on the cheap.

In the short term, professional traders' pessimism can become a self-fulfilling prophecy. Desperate institutions lower their asking prices to get rid of a stock, prompting buyers' bid prices to fall in tandem, creating the very price decline that both sides feared in the first place -- until the selling stops.

Until it does, savvy investors can "get greedy," snapping up bargains from these fearful sellers. (Assuming they really are bargains.) In today's column, we'll see which stocks Wall Street's motivated sellers are most frantic to unload. Once we've compiled this shopping list of potential picks, we'll check them against the collective intelligence of Motley Fool CAPS.

Today's contenders include:

Companies are selected from the "Institutional Ownership Down Last Month" list published on MSN Money on the Saturday following close of trading last week. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Professional investors have given up on these stocks, and are tossing 'em all overboard. But down here on Main Street, we're a more patient bunch. "Give them some time," say Fools, arguing that most of these stocks will bounce back -- and none faster than ENGlobal.

The bull case for ENGlobal Corp
Way back in 2007, CAPS All-Star NeroSagetrade opined that "rising oil prices and the need to build and design more efficient rigs and pipelines" would benefit ENGlobal. But the member also warned: "Their results have been indicative of just how vital rising oil prices are to [ENGlobal's] business."

Oil prices that stand at a fraction of what they were at the peak have damaged ENGlobal's stock. But another of our All-Star investors, JoshUNC, argued in November: "Oil prices will NOT stay at the current price of today... The cheaper gas is the more we use... We still have many years of drilling left and when it picks up so will this stock."

Fellow All-Star kevinottofro isn't waiting for that to happen. Pointing to ENGlobal's: "Low relative PE... PEG & 09 P/E still below normal," this CAPS-ster thinks the time to buy is before oil demand goes back up.

How will you know when demand is about to rise? Look first for improvements in the fortunes of ENGlobal's customers. Many of the big energy names are in there, such as ExxonMobil (NYSE:XOM), Spectra Energy (NYSE:SE), and ConocoPhillips (NYSE:COP).

Wall Street sees these energy stocks growing at single-digit rates for the next five years, which is hardly inspiring. And yet ... ENGlobal booked less than $450 million in revenue in the last four quarters, while Exxon racks up some $350 billion every year. It won't take much of a stir among its customers to move the needle at ENGlobal.

Right now, the stock is selling for only 12 times trailing earnings, and is arguably even cheaper than that; free cash flow for the same time period outran GAAP "earnings" by 50%. Relative to analysts' expected 20% long-term growth, the stock looks awfully cheap. And as far as staying power goes -- its ability to survive the downturn and emerge to profit from future growth -- ENGlobal's balance sheet looks pretty darn secure. Debt amounts to $15.5 million, meaning that should it have a mind to, ENGlobal can probably pay off its debt in as little as one year.

Time to chime in
Long story short, I'm optimistic. The price looks right, the balance sheet strong, and you can't argue with the quality of its client base.

Then again, the aim of this column isn't just to tell you what I think about ENGlobal -- or for that matter, even what our CAPS members think. What we really want to know is what you think. Does this stock leave you feeling fearful, or just plain greedy?