Of all the insight I've heard over these 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. Exploding banks come 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:

Company

Recent Share Price

Forward PE Ratio

5-Year

Expected Growth Rate

TTM Return on Equity

Dividend Yield

CAPS Rating  
(5 max)

Eaton (NYSE:ETN)

$50.62

16.77

7.25%

13.16%

4.1%

****

Asset Acceptance Capital (NASDAQ:AACC)

$8.47

13.75

11%

10.07%

N/A

****

Alcoa (NYSE:AA)

$10.80

43.34

10.01%

N/A

1.2%

****

Data from Yahoo! Finance and Motley Fool CAPS, as of July 23.

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

Stronger than you might think
Industrial goods manufacturer Eaton got squashed as auto industry ties lumped it in with the failure and fallout of Chrysler, General Motors, and Ford (NYSE:F). And this wasn't just guilt by association -- a solid chunk of Eaton's revenue has historically relied on its auto segment, which has since gone kaboom.

But overlooked is Eaton's is diversity. For example, here's how different segments broke out in the first quarter compared to last year:

Segment

Q1 2009 Revenue

Q1 2008 Revenue

Electrical

$1.4 billion

$1.3 billion

Hydraulics

$430 million

$657 million

Aerospace

$418 million

$430 million

Truck

$292 million

$567 million

Automotive

$270 million

$538 million

Some segments have cratered; others are doing well. The net outcome is a company that, through thick and thin, is still pretty robust and currently sports an attractive 4.1% dividend. As CAPS member GKuhfledt wrote earlier this year:

Really a solid company. I originally thought it would suffer as a result of the auto industry tanking, but I was wrong. They're business is to improve upon the electrical systems used in the auto and airline industries, as well as others. [Eaton] is going to do great with all the auto restructuring on the way. Definite buy.

Banks' pain, your gain
The case for Asset Acceptance Capital is straightforward: The company buys charged-off consumer credit from banks for next to nothing, and then milks as many pennies out of that debt as possible. As credit card defaults at companies like Bank of America (NYSE:BAC) and Citigroup (NYSE:C) continue to surge, opportunities to buy charged-off debt are going through the roof. The weaker banks and consumers become now, the stronger and more profitable Asset Acceptance will become in the future.

Now, this one could take a while to pay off (no pun intended), since the consumer rebound that could really juice earnings might take years to materialize. If you're looking for a larger, more high-profile company, check out rival Portfolio Recovery (NASDAQ:PRAA).

Don't give up on Alcoa
It's hard for some to comfortable with aluminum giant Alcoa. After all, it suffered a gut-wrenching crash that took shares down nearly 90% peak-to-trough.

But that's how cyclical companies work. An explosion in profits is followed by a brutal bust that scares investors witless, and then the process starts over at step one. If you're lucky enough to get in at "step one" -- where I think we are now -- the results probably won't disappoint those patient enough to wait it out. As my colleague Matt Koppenheffer wrote earlier this year:

When exactly [a rebound] might happen is not an easy question to answer. Whether it will happen, though, is an easier one. As one of the stars of the metals world, we can find aluminum in our cars, cans, house siding, solid rocket fuel, street lights, bikes, foil, and on and on. Aluminum may be dazed, but I highly doubt it's down for the count.

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.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Portfolio Recovery Associates is a Motley Fool Hidden Gems pick. The Fool has a disclosure policy.