You know that political bumper sticker that goes, "If you're not outraged, you're not paying attention"? It might as well apply to the market these days. It's been a tough decade to be an investor.
A shocking and somewhat interesting statistic
A whopping 70% of all stocks traded on the major U.S. exchanges are down over the trailing three-year period. That's more than 4,000 names in the red -- a list that includes seemingly "defensive" stocks such as PepsiCo
So, if you lost money of late, don't feel bad. There was no hiding from this downturn. The good news is that all of this historical underperformance means there are some cheap stocks out there.
Case in point
Take Barrett Business Services, for example. I found this tiny West Coast professional-employer organization and staffing company during my work as the micro-cap analyst for our Motley Fool Hidden Gems service. At the time, it was trading for a little more than $20 per share. I liked the CEO, I liked the balance sheet, I liked the track record, and I thought it looked cheap. So I told people to buy it.
What happened next was frustrating: It dropped to $17, then to $14, and today it sits around $12.
What's your next move?
What's more, BBSI stock has pretty much stayed put while other names such as Bank of America
That's because Barrett still has a strong balance sheet with $50 million in cash; it has increased its share repurchase program; and it's paying shareholders a nice dividend near 3%. Could the stock drop further from here? Of course. But as the employment picture improves, Barrett should rebound strongly.
Whether the market is rising or falling, it's always a good time to buy excellent companies on the cheap. That's what we're all about at Hidden Gems, and even though it's gotten harder to find cheap stocks, we're still building our portfolio of small-cap bargains.
To read about the stocks we're buying today, click here.
This article was first published on Jan. 10, 2008. It has been updated.
Tim Hanson owns shares of Barrett Business Services and Chipotle. Chipotle Mexican Grill is a Motley Fool Hidden Gems recommendation as well as a Rule Breakers pick. SYSCO is an Inside Value choice. PepsiCo and SYSCO are Income Investor selections. The Fool owns shares of Chipotle Mexican Grill and SYSCO. The Fool's disclosure policy is awesome.