5 Ways to Find Bargains

What do these stocks have in common?

At first glance, not much. They operate in different industries. There aren't any fast growers. And I wouldn't consider these "popular" stocks.

So how are they the same? They are examples of the market's five bargain opportunities that investing greats constantly look for to beat the market.

Without further ado, here are the market's five best must-knows.

1. Great company, good price
Wally Weitz's portfolio is full of great companies that temporarily go out of favor in the marketplace, giving him an opportunity to buy shares in a great company at a good price. Countrywide is a solid mortgage lender and financial services company that has generated solid returns on equity as it has grown. No wonder Weitz and Bill Miller (see below) own big chunks of it in their funds.

2. The turnaround
Given what Eddie Lampert has done with Kmart and Sears, he's got to be in line for the title of "Turnaround King." Lampert grabbed control of Kmart in bankruptcy, started a rational capital allocation program, and has watched the stock take off over the past three years. Bill Miller and Martin Whitman (also below) also own shares.

3. The spin-off
Joel Greenblatt laid out the case for spin-offs in his book You Can Be a Stock Market Genius. Value investing star David Einhorn of Greenlight Capital was clearly paying attention, applying these principles to Motorola's (NYSE:MOT) Freescale Semiconductor spin-off, which has almost doubled since its July 2004 debut.

4. Unloved and mispriced
Bill Miller, manager of the market-beating Legg Mason Value Trust, loves the unloved. That because when "the market is either wrong about how important something is, or wrong about when that something occurs, or both," that creates opportunity. The market was wrong about AES going under like its cousin Enron, and Value Trust shareholders have benefited from Bill's variant perception.

5. The asset play
Mr. "Safe and Cheap," Martin Whitman of Third Avenue Value, loves companies that have great assets and generate lots of cash flow. And he loves them even more when the market doesn't quite understand them fully and sells them at a discount -- as it did with Brookfield.

These are the tools great investors like Weitz, Miller, Whitman, Greenblatt, and Lampert use to outperform the market. And outperform they have.

And the moral of the story is ...
Every day, the market offers up bargain opportunities. We don't always know what form they'll take. But like the great investors mentioned above, Philip Durell and the Inside Value team know the five types of values to look for. That's why they've recommended great companies at good prices, such as Wal-Mart (NYSE:WMT), and turnarounds such as MCI, which was bought out by Verizon.

If you want to find more of the market's best values, come join us at Inside Value. A free 30-day trial lets you check out the service, including all our stock picks, at no charge. Click here for more information.

David Meier is a member of the Motley Fool Inside Value team. David owns shares of AES, but does not own shares in any of the other companies mentioned. Third Avenue Value is a Champion Funds recommendation. The Motley Fool has adisclosure policy.