Get Ready for the Bounce

"Don't catch a falling knife," as the old saw commands. (Pardon my mixing a cutlery metaphor.) The idea of buying a former superstar stock at a discount price certainly has its attractions, but you've got to make sure you catch the haft -- not the blade. That's where Motley Fool CAPS comes in.

Today, we once again stand beneath Mr. Market's silverware drawer, measuring which knives have fallen the furthest. Then we'll call on CAPS to ask which of these stocks -- if any -- Foolish investors believe are ready for a rebound. Let's meet today's list of contenders, drawn from the latest "52 Week Low" list at Nasdaq.com:

Companies are selected from the "NASDAQ 52 Week Low" list published on Nasdaq.com on the Saturday following close of trading last week. 52-week high and recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Knives and knaves
On Friday, no fewer than 492 listings on the NYSE hit their 52-week lows. That's roughly one out of every six securities trading on the Big Board. The Nasdaq was nearly as bad, with 320 new lows (so one stock in 10 has hit bottom). It's a mess out there, no doubt.

But if there's one good thing about a broad-based market sell-off, it's that you find a lot of terrific companies getting the ol' baby 'n' bathwater treatment. Tossed out on their rosy little bums as if they were bums of another sort. You know -- just know -- that some of these babies are gonna bounce right back once the suds subside.

Case in point: Look at the companies on today's list. Stand-out, name-brand firms, every one, and they even include two Fool recommendations: JPMorgan, a Motley Fool Income Investor selection, and Motley Fool Stock Advisor pick American Eagle, which the Fool owns in its own right. The stock ranking highest in the estimation of investors today, however, is "recession-proof" Procter & Gamble. Let's find out why:

The bull case for Procter & Gamble

• If ever there was a company that needed no introduction, Procter & Gamble is it. Everybody knows P&G; 4,200 investors have written about it on CAPS. Today, we'll let some of our newer players do the talking, beginning with an opening salvo from capscartor: "P&G is one of the best run companies in the world. It has a strong line-up of top executives whose talent is collectively unmatched anywhere. This is a company that loves to compete, but importantly does so through a filter of integrity and transparency. [Its] performance [speaks] for itself and the consistency of its performance [lets] one sleep at night. ... A Company that has [its] products in 99.9% of U.S. household and is entering more hoseholds in emerging markets every day is a must for any serious investors portfolio."
• Own it, yes. But when? ebitda1 thinks now is a dandy time to get in. After all: "The consumer products giant currently trades at the low end of historic price to cash flow. A wonderful defensive play in a slowing domestic economy and growing consumerism around the world."
• One of the great things about CAPS is that with 110,000 investors and counting, we're bound to have a few contributors who can offer firsthand experience with the companies they recommend. One such investor, Mary953, opines: "The employees who remain for a career at P&G may burn out by retirement, but they retire as millionaires because stock used to be one of the retirement plan options. The stock used to double its price about once every 5 years with stock splits to keep the price comfortable for investors. This is a hold and forget kind of stock that remains a good bet for the long term. (I am married to a former P&G employee, so I have watched this stock over the last 35 years and it is fairly inflation-proof. This is, after all, the company that put the soap in soap operas."

No two ways about it: P&G is definitely NBA material. But with a market cap already pushing $190 billion, can a company this big really bounce?

Heck, yeah! P&G's total market cap may intimidate, but the stock itself sells for just 18 times earnings. And on a cash profits basis, you're looking at something closer to 15 times free cash flow. Not a bad price to pay for a globally dominant consumer products play with 11% annual projected growth ahead of it -- according to analysts, that's faster than either of rivals Johnson & Johnson (NYSE:JNJ) or Kimberly-Clark (NYSE:KMB) can muster -- and a 2.6% dividend to tide you over while you wait for said growth to materialize.

While I'll grant you that P&G is not out-and-out cheap at today's price, great companies rarely ever get truly cheap. Sometimes, a good price like today's is the best you're going to get.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Procter & Gamble -- or even what other CAPS players are saying. We really want to hear your thoughts. Click on over to Motley Fool CAPS and tell us what you think.

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