From professionals to amateurs, every investor has felt the pain of recent market moves. When will the madness end? No one knows, but all investors can agree that it's more important than ever to find solid companies to protect your portfolio against the forces of evil.

To separate the champs from the chumps, I ran a screen on CAPS, The Motley Fool's investor intelligence database, looking for some of the best companies the market has to offer. These types of businesses could very well be the next Apple (NASDAQ:AAPL) or Google (NASDAQ:GOOG).

The criteria used for the search were simple:

  • I only wanted to consider stocks our CAPS community considers the best of the best. These businesses needed at least 900 active picks and five-star ratings, the highest available.
  • Next, I wanted to make sure that their balance sheets were solid. To that end, I sought businesses with debt-to-equity ratios of less than 1.
  • Insiders who are aligned with shareholders are also a critical consideration. Management should definitely have financial ties to its company's performance. For that, I required insider ownership higher than 5%.
  • Finally, a return on equity (ROE) of more than 20% is a must if you want to uncover potential market-beaters. Warren Buffett believes that return on capital (ROE is a proxy when there is little debt) is key when he evaluates a company.

Here's the nice, eclectic mix the CAPS screen produced:


Debt to Equity

Insider Ownership

Return on Equity (TTM)

American Eagle Outfitters (NYSE:AEO)












Navios Maritime   (NYSE:NM)




Quality Systems (NASDAQ:QSII)




Source: Motley Fool CAPS screen from 10-1-08. TTM = trailing 12 months.

Please note that these should be viewed as ideas for further research, not recommendations. Toward that end, let's look at what CAPS members have to say about a couple of the candidates above.

CAPS member sethatk took flight with American Eagle back in March:

At about 9 and a half times earnings and over a 2% dividend, no can you not buy, unless you think the sky is falling, once we are through all the fear, its off to the races for [American Eagle].

In mid-June, mkrauss123 shared these thoughts on LoopNet:

I think this service has reached the point where it will turn around. Recent changes to their pricing model (by listing as opposed to unlimited per broker) make a lot of sense. Strong potential for network effect.

Are these financial dynamos ready to defend your portfolio, or will they leave it vulnerable to plundering? Our CAPS community, comprising some of the brightest minds around, would like to know what you think. Sign up and give us your take on whether or not these stocks can defend your portfolio. It's 100% free.

More CAPS content and general Foolishness:

On Oct. 7, 2008, Fool Co-Founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Wade Michels makes sure he’s not the bad guy by disclosing the stocks that he owns. He doesn't own shares of any of the ones mentioned here. LoopNet is an active and II-VI is a former Motley Fool Hidden Gems recommendation. LoopNet and Google are Rule Breakers picks. Quality Systems, American Eagle Outfitters, and Apple are Stock Advisor picks. The Fool owns shares of American Eagle. The Fool's disclosure policy is a journalism hero.