Of all the insight I've heard over these last few crazy months, the most telling came from an investor who appeared on CNBC last fall and, being entirely serious, advised, "There're only two positions to be in right now: cash, and fetal."

I get it. Even with the recent rally, it's ugly out there. Many companies that overleveraged their balance sheets are permanently impaired and will likely never fully rebound. AIG (NYSE:AIG) comes to mind. We had an unprecedented boom; now we're in the middle of an unprecedented bust. That's how markets work.

Even so, history tells us time and time again that market panics and forced sell-offs indiscriminately throw the good out with the bad. The frenzy over financial markets, and the "sell-now-ask-questions-later" mood of global investors, is providing bargain-hunting investors with the sort of opportunities we haven't seen in decades.  

Using the wisdom of our 135,000-member-strong CAPS community, I've hunted down a few dirt-cheap, high-quality companies. Have a look:


Recent Share Price

Forward P/E Ratio

5-Year Expected Growth Rate

TTM Return on Equity

Dividend Yield

CAPS Rating  
(Out of 5)

Accenture (NYSE:ACN) 







Bristol-Myers Squibb (NYSE:BMY)














Data from Capital IQ, Yahoo! Finance and Motley Fool CAPS, as of Aug. 5. TTM = trailing-12-month.

Let's break down the bullish argument for each one.

Consulting outfit Accenture is in an enviable position: It helps other companies save money. In an economy where the only way to stay competitive, if not alive, is to keep costs and efficiencies in line, management consulting's outlook may have never looked so bright. As CAPS member FoolishPhilbert writes:

Accenture have demonstrated that during 2008 they have been able to generate record new business by assisting customers to develop efficiencies and cut costs; which will be every businesses' number one priority during the coming months and very likely for the next couple of years.

In 2008 bookings reached an all-time high of $26.79 billion and net revenues were a record $23.39 billion, compared with $19.70 billion for fiscal 2007, an increase of 19 percent in U.S. dollars and 11 percent in local currency. Diluted earnings per share increased 35 percent compared with 2007.

Accenture have generated significant cash flow, have no debt and I expect their stock to outperform the S&P over the next year.

What's great about Accenture, and all consulting companies for that matter, is the naturally low need for capital expenditures. When your major cost is paying employees, revenue's trek toward the bottom line is both swift and reliable.

A closer look at Bristol-Myers Squibb
Bristol-Myers Squibb recently agreed to purchase Medarex (NASDAQ:MEDX), renewing excitement over its pipeline. As CAPS member Buckster99 writes:

[Bristol-Myers Squibb] is purchasing Medarex who has a wonderful potential blockbuster drug in Ipilimumab. If approved by the FDA by next year this one drug could become a family of cancer fighting drugs against various forms of cancer. Medarex has forty other compounds in various stages of development and [Bristol-Myers Squibb] can utilize their financial strength to bring them forward.

And as my Foolish colleague Brian Orelli explains, with Medarex comes royalties on drugs from Johnson & Johnson (NYSE:JNJ) and Novartis (NYSE:NVS). While waiting for Bristol's plans to play out, investors are feasting on an extraordinary 5.7% dividend -- just about as high as you'll find these days.

A closer look at Gap
It might seem utterly nuts to own a company like Gap these days, what with consumer spending in the tank and all, but a few points should be taken into consideration:

  • When you back out its $2.45 per share in cash (which is reasonable, considering the debt-free balance sheet), you get down to something close to 10 times earnings.
  • Companies reliant on discretionary spending are hurting, but that doesn't mean shares can't get cheap. Moreover, I wouldn't rule out at least a temporary bump in sales if continued improvement in consumer sentiment sparks a rush to fulfill pent-up demand. While I'll admit Gap's outlook is nothing to be giddy over, its valuation seems to reflect this reality.
  • You'll be hard-pressed to find one investor who's excited about this stock, which, from a contrarian point of view, usually isn't a bad sign.

Your turn to chime in
Have your own take on any of these companies? 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.

For related Foolishness:

Fool contributor Morgan Housel owns shares of Johnson & Johnson. Accenture is a Motley Fool Inside Value recommendation. Johnson & Johnson is a Motley Fool Income Investor selection. Novartis AG is a Motley Fool Global Gains recommendation. The Fool has a disclosure policy.