One man's trash, they say, is another man's treasure. For investors that are willing to hold their noses and go Dumpster diving, this can certainly be true in the stock market.

Those who have tuned in for a few of my columns know that my usual modus operandi is to find high-quality companies that show love for their investors through dividends. And while strong dividend payers do make up most of my portfolio, my holdings aren't quite that one-dimensional.

In fact, a portion of my portfolio is stocked with companies that have hit some serious bumps in the road and as a result have simply gotten so cheap that I couldn't pass them up. And while the market's double-digit run since mid-summer has made it a little tougher to find super-cheap stocks, there are still some lurking out there.

Rule No. 1
Though I don't follow his model exactly, the inspiration for this corner of my portfolio is Ben Graham's deep value approach. Graham would seek out the absolute most down-trodden stocks and put together a portfolio based on these "cigar butts" that still had one puff left in them.

A key piece of Graham's strategy though was that he wasn't keying in on one or two individual stocks. Instead, he would find a whole host of left-for-dead stocks and create a portfolio with a bunch of them. So rule No. 1 when taking this approach is: Don't put all of your eggs in one basket.

5 to consider
What initially puts a company on my Dumpster-diving radar is a low valuation. I typically screen for companies that are selling at less than half of their tangible book value. Once I have that list, I use some softer criteria to further dig in and figure out which companies will be the best bets. I look for companies that have at least a decent underlying business that's been able to produce profits in the past; if it's currently in the red, I want to feel comfortable that losses won't swallow up the rest of the equity value; and I prefer to see a company that is still churning out cash even if it's not showing accounting profits.

With those guidelines in mind, here are five Dumpster stocks that I think are worth putting on your radar:

Company

Price / Tangible Book Value

Previous 12 Months Net Income (loss)

Previous 12 Months Cash Flow From Operations

Genworth Financial (NYSE: GNW) 0.4 $343 million $1.1 billion
Marshall & Ilsley (NYSE: MI) 0.4 ($642 million) $846 million
Mirant (NYSE: MIR) 0.3 $294 million $434 million
Excel Maritime (NYSE: EXM) 0.3 $276 million $169 million
Presidential Life (Nasdaq: PLFE) 0.4 $17 million $23 million

Source: Capital IQ, a division of Standard & Poor's.

While those numbers tell part of the story, let's take a bit of a closer look to see why I think the market is misjudging these stocks.

Genworth has been tangled up in losses incurred as part of its mortgage insurance business -- which, if you haven't heard, hasn't been a great business to be in lately. The company is, however, much more diversified than mortgage insurance competitors like Radian (NYSE: RDN) and MGIC Investment, and that's shown up as much more contained losses at Genworth. I think the discount that investors have put on Genworth's stock assumes losses far larger than the company will face.

If you believe the numbers, then the banking sector is slowly, but surely, starting to recover. But while investors are starting to get comfortable with some banks again, others, like Marshall & Ilsley, continue to be on most investors' "avoid" list. Thanks to heavy exposure to hard-hit areas like Arizona, M&I's loan book still looks pretty sickly, and Moody's has continued concerns about the bank's financial strength. However, I think the current valuation shows that investors are expecting loss levels that will be well above what M&I will actually end up facing.

Mirant will no doubt keep investors on their toes. This electric power generator's results tend to swing pretty wildly thanks to its hedging activities, new environmental regulations could impose new costs, and the company is preparing to merge with RRI Energy (NYSE: RRI). While investors seem to be attributing very little value to Mirant's assets, I see them as a good backstop for the stock, while some nice upside could be in store if today's pessimism proves overdone.

Dry-bulk shipping is a cyclical business, and when the arrow is pointing in the wrong direction, investors start to jump ship. Overcapacity has started to weigh on shipping rates even though the steel market -- which drives demand for iron -- has been stronger recently. On the basis of low valuation, investors pretty much have their pick of dry-bulk carriers, but I went with Excel because it's among the cheapest and has a better-than-average balance sheet.

Finally, Presidential Life is ... well, it appears to simply be overlooked. Granted, the provider of annuities and life insurance has never been a destination for excitement, and the recession battered its investment portfolio. The company is still no thriller today, but it appears to be on the mend. Besides the stock's low valuation, investors get the added benefit of a 2.7% dividend while they wait around.

I'll be adding all five of these stocks to my CAPS portfolio, and after my trading lock-up expires, I may be adding one or more of these to my personal portfolio. Think I'm crazy to be even considering these stocks? Head down to the comments section and share your thoughts.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.