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 -- they rank in the top 20th percentile of our 115,000-plus investor community, in which we have rated more than 5,400 stocks. So far, there is strong evidence that five-star stocks outperform all others. They've returned 12% annually in the first 20 months since CAPS' inception in 2006, whereas 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.
  • A current price within 30% of their 52-week lows.


Fools Saying Outperform

All-Stars Saying Outperform

% Above 52-Week Low

Market Cap (Billions)






Altria Group (NYSE:MO)





ConocoPhillips (NYSE:COP)










Tata Motors (NYSE:TTM)





Transocean (NYSE:RIG)





Walgreen (NYSE:WAG)





Sources: Motley Fool CAPS and Yahoo! Finance.

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 our All-Stars have to say about several of them.

Recently JackChampain told us why he loves NVIDIA:

Perfect storm of bad luck & bad circumstances. An innocent bystander caught in the middle of the bloodbath. They have the balance sheet to ride this out and when chip sales come back to life this stock will fly. I like this stock under $20, I love it under $12!

I wonder how Jack feels about the stock now that it sits at less than $9!

The OtherOracleOfOMA chimes in with this take on a certain sin stock:

You know why I like the cigarette industry? They make a product for a quarter and sell it for a dollar, it's more addictive than heroin ... the dividends are fat and reliable, and there's fanatical brand loyalty. [Altria] is an ATM, and at 20 bucks a share, it's practically a gift.

Last month, butcherinthemix succinctly described why he believes Transocean will beat the market going forward: "The fundamentals, growth, technical prowess, near monopoly of the deepwater, and effective management will continue to make this heavyweight of the offshore sector continue to be well rewarded for developing the ever dwindling strategic oil resources of the future which the global economy has been built around."

Are these stocks really cheap?
The only way to know the answer to that question is to do your own due diligence. A screen is a useful tool for finding undervalued stocks, but 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.

On Oct. 7, 2008, Fool co-founder David Gardner and his Motley Fool Pro team invested $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.

Bryan White owns no shares in any company mentioned in this article, and he doubts the likelihood of ever seeing a Pete Rose plaque in the Hall of Fame. Tata Motors is a Motley Fool Global Gains selection. Petroleo Brasileiro is a Motley Fool Income Investor pick. NVIDIA is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletter services free for 30 days. The Fool's disclosure policy would make Peter Uberroth proud.