"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful." -- Warren Buffett     

Can't argue with that, can you? I don't need to remind you of how much fear is in the market these days. It's a real gut check, but that fear is creating opportunities for investors patient and diligent enough to search for the babies thrown out with the bathwater.

Using our Motley Fool CAPS ranking system's screening tool, I scanned for bargain companies with the following characteristics:

  • Five-star ratings -- the highest our CAPS community offers.
  • Estimates of profitability in 2009
  • Terrible performance over the past 52 weeks. Yes, almost every stock meets this condition, but I'm looking for the bargain opportunities. Solid companies with great outlooks that are being valued like losers.

Have a look:

Company

52-Week 
Price Change

Recent Price

2009 Earnings Estimates

ArcelorMittal
(NYSE:MT)

(71%)

$27.06

$0.81

Johnson & Johnson
(NYSE:JNJ)

(19%)

$54.89

$4.51

Pepsi
(NYSE:PEP)

(26%)

$49.49

$3.68

UnitedHealth
(NYSE:UNH)

(21%)

$28.39

$3.06

Valero
(NYSE:VLO)

(49%)

$21.88

$2.51

Data from Motley Fool CAPS and Yahoo! Finance, as of May 7, 2009.

None of these are necessarily recommendations -- just good starting points for you to dig a little deeper. You can rerun an update of this screen yourself, if you like.

Keep it simple, fool
What have we learned over the past year or two? Many things, but these stick out in my mind:

  • Companies with no sustainable advantage often either fail or succumb to finding nefarious ways to make money. Or both.
  • If you don't understand exactly what a company does, keep on walking. How many investors could have explained Citigroup's (NYSE:C) SIV unit three years ago? Or AIG's (NYSE:AIG) derivative operations? Very few. Those who couldn't learned the hard way.

So it's back to the basics for us. With markets still at comfortably depressed levels, now is a great time to look for company's that:

  • Have stable, time-tested advantages that would take a nuclear explosion to break.
  • Have a business model any fourth-grader can understand.
  • Are, by any historical measure, cheap.

Johnson & Johnson has these three traits in spades. I'd put my money where my mouth is right now if it weren't for the Fool's disclosure policy.

A confluence of factors makes this company enormously attractive. For decades, its business model of acquiring top-tier health-care businesses and keeping them under one roof while letting individual units remain fairly autonomous has created one of the few conglomerates that actually works. Add to it that health services is one of the few industries with a clearly prosperous future, and you get a wonderful situation where the odds of consistent and growing earnings is about as close to fail-safe as it comes. As CAPS All-Star ValuBux wrote earlier this year:

As close as recession proof as any other stock. Health care a solid long term play with aging boomers being followed by generations of obese Americans. Should see growth along most product lines.

Of course, that in itself doesn't mean much unless you can acquire shares at attractive prices. Thankfully, you can. With shares down by one-fifth over the past year, you can now grab this bad boy at 12 times forward earnings -- a figure that would be typically be deemed appropriate for any ol' average company. Better yet, those shares come equipped with a 3.6% dividend yield -- a dividend that has been paid every year since 1944, by the way.

CAPS All-Star rwpaules recently wrote a pitch that sums up how respected this company really is:

J&J is a company whose stock you buy and never sell. Solid long-term performance. Solid record of dividend increases. The company is well-run. This is my largest holding, and I add to it as often as my budget permits.

Your turn to chime in
Have your own take on this health care giant? More than 130,000 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. Johnson & Johnson and PepsiCo are Motley Fool Income Investor recommendations. UnitedHealth Group is a pick of Stock Advisor and Inside Value and the Fool owns shares of it. The Motley Fool has a disclosure policy.