Fearful Stocks for Greedy Investors

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Of all the Oracle of Omaha's orations, this one holds a special place in Foolish investors' hearts. When looking to bag a bargain, a panicked sell-off by jittery investors offers you a great chance to snap up stocks on the cheap.

In the short term, professional traders' pessimism can become a self-fulfilling prophecy. Desperate institutions lower their asking prices to get rid of a stock, prompting buyers' bid prices to fall in tandem, creating the very price decline that both sides feared in the first place -- until the selling stops.

Until it does, savvy investors can "get greedy," snapping up bargains from these fearful sellers. (Assuming they really are bargains.) In today's column, we'll see which stocks Wall Street's motivated sellers are most frantic to unload -- and whether you should buy 'em:

Companies are selected from the "Institutional Ownership Down Last Month" list published on MSN Money after close of trading on Friday. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
Up on Wall Street, the pinstripe-and-wingtip crowd are unloading these stocks just as fast as they can -- and can you blame them? Houston American's been in freefall since an article came out earlier this month, declaring the company ready to "collapse." Nymox's downtrend has lasted even longer, ever since it reported widening losses last month. And problems with obtaining raw materials needed to produce its "Xyrem" narcolepsy drug have plagued Jazz (even as they help rivals Novartis (NYSE: NVS) and GlaxoSmithKline (NYSE: GSK), which offer the competing drugs Ritalin and Dexedrine.)

But as bad as these companies' troubles seem, and as poorly as Main Street investors seem to think of them, there's one stock on today's list that rises above the pack. Wall Street may hate Apogee Enterprises, and is dumping the stock, but a lot of Fools think the pros are dead wrong.

Let's find out why, as we review ...

The bull case for Apogee Enterprises
CAPS All-Star shaileshnita introduced us to Apogee late last year as a maker of: "glass products and related services. This company has no debt and a very attractive valuation ..."

Near-All-Star Varchild2008 agrees, pointing to Apogee's: "nice dividend + yield percent, lots of cash on balance sheet, reasonable gross margins in terms of the sector ... What more should I look at to determine whether this is an undervalued stock? The P/E is well below the sector average! The stock used to trade at $30."

Last but not least, All-Star investor MJKpayday gives us a first-person view of what's going on at Apogee: "I'm in the construction industry and can relate. They design and develop windows-exciting stuff right? [But] The 'green energy' movement for buildings is real. Energy star buildings and LEED certified buildings mean something. Rents are higher and many government institutions require it for new leased spaces."

A window into construction trends
MJK even goes so far as to call Apogee a: "quintessential Hidden Gems" recommendation. It's not a recommendation, by the way. MJK is just saying it should be -- and I agree. In fact, I've long been a fan of Apogee.

Now, did the company have a rough few months last quarter? Sure it did. "Tight commercial real estate credit and depressed employment levels" hurt the firm's commercial windows business, and CEO Russell Huffer promised further tough times in "fiscal 2011" (i.e. calendar year 2010). That said, things may not be as bad as Wall Street fears.

Sure, last week's headline numbers for industrial output were down. But according to The Wall Street Journal, the underlying theme to this story was a weakness in airplane and plane-parts manufacturing at Boeing (NYSE: BA) and its fellows in the civilian aircraft industry. Meanwhile, we saw a string of heavy industrialists such as Eaton (NYSE: ETN) and United Technologies (NYSE: UTX) report strong earnings.

Why is this encouraging for Apogee investors? Because within the commercial construction industry, Eaton builds the electrical systems. UTC installs the HVAC and elevators... and Apogee puts in the windows. So if business is booming for Eaton and UTC, it stands to reason that Apogee, too, should do well.

Foolish final thought
How long it takes for this to show up in Apogee's numbers is anyone's guess, but to me, the numbers already look pretty good. Apogee generated more than $87 million in free cash flow last year, and analysts project long-term earnings growth on the order of 12.5%. With Apogee shares changing hands for barely four-times free cash flow after last week's, the stock looks temptingly cheap -- enough so that just as soon as this article publishes, I intend to head over to Motley Fool CAPS and rate the stock an "outperformer" myself.

Think I'm crazy? Visit CAPS yourself, and vote against Apogee. Let's see who's calling this stock right.

Is there such a thing as a growth stock selling for an attractive price? There is. There are. They're here.