Of all insight I've heard over these few crazy months, the most telling came from an investor who appeared on CNBC last fall. In all seriousness, he advised, "There're only two positions to be in right now: cash, and fetal."

I get it. Even with the recent rally, it's ugly out there. Many companies that overleveraged their balance sheets are permanently impaired and will likely never fully rebound. Citigroup (NYSE:C) and Fannie Mae (NYSE:FNM) come to mind. We had an unprecedented boom; now we're slowly trying to crawl out of an unprecedented bust. That's how markets work.

Even so, history tells us time and time again that market panics and forced sell-offs indiscriminately throw the good out with the bad. The "sell-now-ask-questions-later" mood of global investors is providing bargain-hunting investors with the sort of opportunities we haven't seen in decades. Use that to your advantage.

Using the wisdom of our 140,000-member-strong CAPS community, I've hunted down a few dirt cheap, high-quality companies. Have a look:


Recent Share Price

Forward P/E Ratio

5-Year Expected Growth Rate

TTM Return on Equity

Dividend Yield

CAPS Rating
(out of 5)

Constellation Brands (NYSE:STZ)







Southern Company (NYSE:SO)







Microsoft (NASDAQ:MSFT)







Data from Yahoo! Finance and Motley Fool CAPS, as of Sep. 1.

Let's break down the bullish argument for each one.

A closer look at Constellation Brands
"Never underestimate the people's ability to buy booze in a recession" writes CAPS member tkoss. All joking aside, there's some truth to this: According to the Wall Street Journal, the "bar and drinking places" sector saw a 5.8% increase in sales over the past year. How many other industries can say that? Discount retailers. Bankruptcy attorneys. Maybe loan sharks. Not many.

Yet companies like Constellation Brands, and larger rival Diageo (NYSE:DEO), trade at depressing valuations that'll make you think we're returning to Prohibition. Constellation currently fetches about eight times forward earnings estimates, yet it's expected to grow at an 8%-plus clip over the next five years. That ain't bad.

A closer look at Southern Company
All right, so you don't spend your days glued to CNBC. You have a life outside slogging through financial statements. You don't know how to value derivatives. (Honestly? No one does.) You don't have the time to figure out whose impotence drug provides the most zing. It's cool. Find comfort in a no-brainer, simple, time-tested giant with a huge 5.6% dividend: Southern Company.

Southern Company is the fourth-largest public utility company (by sales) in the country, providing power to millions of Southerners. It's frequently atop Fortune magazine's "most admired" utility companies, and it has made money every quarter but one going back to 1993. As CAPS member KyrieLoon wrote in June:

Death, taxes, and utilities will always be with us. [Southern Company] is one of the very best run of the utility companies, has a depressed-at-the-moment stock price, and currently pays a 6 % dividend. That's a hard combination to find!

Of course, the stock has since moved higher, which means the yield is lower than in June, but not by much.

A closer look at Microsoft
I thought Microsoft was cheap back in February, and I still think it's cheap today. Look, Apple (NYSE:AAPL) or no Apple, Windows 7 or no Windows 7, this is a company with a moat seen rarely in the history of the world, trading at 12 times earnings. PCs aren't going away. Microsoft Office isn't going away. And as of November 2008, Windows still had a market share of almost 90%. The days of consistent, gangbusters growth are gone, but, come on, tell me that isn't already priced into a stock with an ironclad balance sheet trading at a multiple far below the market average.

Really. Please. I'd love to hear it.
Have your own take on any of these companies? More than 140,000 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 related Foolishness:

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Southern and Diageo are Motley Fool Income Investor picks. Apple is a  Stock Advisor recommendation. Microsoft is an Inside Value selection. The Fool has a disclosure policy.