"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 total losers.

Have a look:


Price Change

Recent Price

2009 Earnings Estimates

Burlington Northern Santa Fe (NYSE:BNI)








Johnson & Johnson (NYSE:JNJ)




Petroleo Brasileiro (NYSE:PBR)




Waste Management (NYSE:WMI)




Data from Motley Fool CAPS, Yahoo! Finance, and Capital IQ (a division of Standard and Poor's) as of June 24, 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'd like.

Time to follow Buffett again?
Forget innovative green technology. The most cost-effective use of alternative transportation (if you want to call it that) might be by good, old-fashioned railroads. Warren Buffett figured this out years ago. As diesel prices went up, the competitive advantage railroads held over trucks surged. Compared to trucks, railroads can transfer more goods per gallon of diesel by a factor of three. This was hugely beneficial for rail companies like Union Pacific (NYSE:UNP) and Burlington Northern, both of which Buffett's Berkshire Hathaway (NYSE:BRK-B) owns in its portfolio.

But as fuel prices nosedived last fall, rail's competitive advantage dwindled. Along with a general capitulation in bulk shipping, railroaders have been bludgeoned pretty hard.

But how many of you truly believe the commodity malaise will be a permanent matter? It isn't just the possibility of an economic rebound that'll push commodity prices higher -- dollar weakness can get the job done on its own. For example, you've probably noticed that energy prices have soared while the dollar has sunk over the past few months. That isn't coincidental.

And that's why some are looking at the rebirth of the railroad play. CAPS member Crosshair recently put together an elaborate description of Burlington Northern, writing:

Efficient use of non-renewable energy sources will largely be rewarded in the future. As oil keeps creeping up in anticipation of the upcoming global recovery, those businesses which gobble fuel at alarming rates will look to find ways to cut down their consumption. Moreover, this White House Administration pledges to combat emissions and prop up fuel efficiency standards; slow to react enterprises will find their competitive advantages eroded vis-a-vis leaner, greener, industry participants. All this bodes well for an unlikely beneficiary - an old fashion train company. Actually, this company is anything but old fashion.

Over the past decade, Burlington has spent $30 billion revamping its infrastructure. This move enables its fleet to travel longer distances while burning less diesel fuel. In the words of the company’s Chairman, President and Chief Executive Officer, freight rail can help reduce America's dependence on foreign oil, as trains now transport on average a ton of freight close to three times as far as a truck on the same amount of fuel. Also, freight rail can provide "tremendous value" in reducing the country’s transportation carbon footprint if we decide to move away from truck-only freight transportation …

Shares of Burlington Northern Santa Fe Corp. represent a great value and should be considered by those searching for long term price appreciation. With a dividend yield of 2.10%, this stock will reward you while you wait for revenues to clock in close to their historical average. If you need more convincing, consider this - Berkshire Hathaway Inc, run by no other than the Oracle of Omaha, Warren Buffett, counts this gem as one of its largest holdings. There is nothing like Buffett's mark of approval to instill confidence in one's own convictions. But, as a prudent investor, one needs to perform their own due diligence -- this serves as a good start.

Your turn to chime in
Have your own take on Burlington Northern, or the railroad trade in general? More than 135,000 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.

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Fool contributor Morgan Housel owns shares of Berkshire Hathaway. Berkshire Hathaway and CEMEX are Motley Fool Stock Advisor recommendations. Berkshire Hathaway and Waste Management are Motley Fool Inside Value picks. Johnson & Johnson and Petroleo Brasileiro are Motley Fool Income Investor picks. CEMEX is a Motley Fool Global Gains selection. The Fool owns shares of Berkshire Hathaway and CEMEX and has a disclosure policy.