Cheap stocks that are backed up by solid businesses are as hard to find as a Pete Rose plaque in the Baseball Hall of Fame. But thanks to the level of pessimism ravaging the markets, I believe we can find a few deals out there that can drive our portfolios for years to come.
The greatest investor of our time, Warren Buffett, once said: "Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well." If Warren's right, then right now is a great time to go bargain hunting.
Join me as I use our CAPS screener to unearth some of the most popular stocks among our CAPS All-Stars that are also potentially dirt cheap. Our All-Stars represent the best of the best, ranking in the top 20th percentile of our 110,000-plus investor community, where we have ranked more than 5,500 stocks. So far, there is strong evidence that five-star stocks outperform all others, returning 12% annually since CAPS' inception in 2006 while one- to two-star stocks have yet to get out of negative territory.
With this in mind, I screened for stocks with:
- A rating of five stars from our community.
- At least 1,000 outperform picks.
- At least 300 All-Star outperform picks.
- Market Caps of more than $1 billion.
- Trading within 10% of their 52-week lows.
|
Company |
Fools Saying Outperform |
All-Stars Saying Outperform |
% above 52-week low |
Market cap (billions) |
|---|---|---|---|---|
|
Altria (NYSE:MO) |
6,399 |
1,673 |
9.37% |
$45.5 |
|
Applied Materials (NASDAQ:AMAT) |
1,261 |
322 |
6.69% |
$23.3 |
|
Corning (NYSE:GLW) |
2,504 |
585 |
6% |
$32.2 |
|
Pepsico (NYSE:PEP) |
2,603 |
752 |
5.73% |
$104.8 |
|
Walgreen (NYSE:WAG) |
1,474 |
345 |
9.27% |
$33.8 |
|
Cemex (NYSE:CX) |
3,682 |
1,104 |
6.07% |
$16.7 |
|
Manitowoc (NYSE:MTW) |
1,103 |
384 |
6.5% |
$3.5 |
Have these loved stocks lost their luster, or are they just caught up in a pessimistic market? Either way, I'm presenting them as a list for further research. Let's see what some of our All-Stars have to say about several of them.
Back in March, DemonBzer pointed out Altria's strong dividend:
Core holding. Addicts in the U.S. will always smoke, and at the rate [Altria's] management will be giving cash back to shareholders, everyone should be happy.
In April, ennui raved about the growth prospects for Applied Materials:
Stable, profitable semiconductor play now moving in a big way into becoming a solar manufacturing play. Not that they make the solar panels--they supply the companies making the panel with all types of technical expertise to make them more profitable & more cutting-edge. Growth prospects are enormous.
Recently, chk999 made a solid point in this Corning pitch:
The thesis is that only three companies make the glass for flat screen TVs and the flat screen market still has a lot of penetration to do.
Now let's take a look at our own Stock Advisor newsletter recommendation Cemex. In May, Terok1313 hit us with this pitch:
Concrete is needed for a vast array of infrastructure improvements, and [Cemex] should easily profit from the shift that's taking place in the global economy.
Are these stocks really cheap?
The only way to know the answer to that question is to do your own due diligence. While a screen is a useful tool for finding undervalued stocks, it's not enough on its own. Take advantage of the current market's mood swing and try to unearth your own fallen angels at Motley Fool CAPS.
