Break out the fried green tomatoes and fresh-from-the-Gulf oysters -- it's a Southern backyard investing barbecue!

There are many good reasons for researching investment opportunities in a certain geographic area. Today, we're skipping across the state of Alabama, where it says "Heart of Dixie" right on the license plate.

If you happen to live in Birmingham or Montgomery, you already have a few advantages when it comes to evaluating the local market: access to local news sources and the word on the street, and a high probability of being a customer or employee of these companies. And if you're not a local resident, you might still want to know whether the weather matches the business climate -- a hot area could be chock-full of undiscovered treasures on their way to greatness.

Here are the largest companies headquartered between Grand Bay and Huntsville:

Company

Market Cap (billions)

CAPS Rating

Bull Ratio

Regions Financial (NYSE:RF)

$21.5

**

78%

Compass Bancshares (NASDAQ:CBSS)

$9.3

**

73%

Vulcan Materials (NYSE:VMC)

$9.2

**

89%

Energen (NYSE:EGN)

$3.9

*****

93%

Colonial Bancgroup (NYSE:CNB)

$3.4

*

50%
Data taken from Motley Fool CAPS on 8/3/2007.

Not having followed the banking sector closely, I was surprised to find such a wealth of banking and insurance operations in Alabama. I thought most of those had been knocked off in our North Carolina installment. Big boy Regions is a familiar name, since that bank merged with AmSouth, the crosstown rival with its large Floridian footprint, and slapped those cheery green logos up all over my hometown. In all honesty, the Yellowhammer State is on the slate today because I wanted to learn more about this local newcomer.

As it turns out, though, these banks get little respect from our Motley Fool CAPS community. Two stars is the finest adornment you'll find on Alabaman bankers' lapels, although the insurance reps tend to fare a bit better.

Regions itself is working through the usual post-merger layoffs and process realignments, and the company is getting rid of an albatross named "non-conforming mortgage origination." The housing bubble reaps another victim. But management gets good grades from our users; long-term prospects seem to be promising. This would-be giant just needs to find its footing before we can climb onto its broad shoulders.

How 'bout dem small shrimp?
Stepping out of Alabama's financial wheelhouse, you'll find a couple of bona fide household names in the state. There's bookstore chain Books-A-Million (NASDAQ:BAMM) -- the smallest of the Big Three bookseller chains, but tied for that group's best CAPS rating with two stars. Boy, is that sector popular! The current battle cry amid the bookshelves is "Harry Potter to the rescue!," but that particular hero won't come around much anymore.

Out of all 29 in-state tickers, the smallest market cap belongs to movie-rental chain Movie Gallery. That's another unloved issue, and the company is years behind its larger rivals in the move to online or by-mail distribution. Those piles of bricks are weighing Movie Gallery down like so much weight around its neck. At the bottom of Mobile Bay.

Foolish takeaway
All in all, our CAPS community has a dire view of Alabaman business prospects today. The median grade is a measly two stars, and the mean sits at 2.3. There are no Foolish newsletter recommendations here, current or otherwise, and the state has not picked up any significant defectors from battle-scarred neighbor New Orleans. Look at the top cap numbers above -- big business is largely anathema to this state.

That doesn't mean that things can't turn around -- just that the outlook is bleak today. If you're a deep-discount value hunter with a nose for turnarounds, go ahead and dig deeper here. The rest of us will wait outside until you're done.

Do you agree? Disagree? Feel free to weigh in on the Heart of Dixie -- or on any stocks at all, really -- by joining Motley Fool CAPS and blasting away with your ratings and commentary pitches. And if Muscle Shoals isn't your 'hood, maybe next time we'll take the Foolmobile around to where you live.

Further Foolishness:

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, or follow him around the world on these Foolish local-business treks. Foolish disclosure is always red-hot.