"I will tell you how to become rich.
Close the doors. 
Be fearful when others are greedy.
Be greedy when others are fearful."
 -- Warren Buffett

Can't argue with that, can you? I don't need to remind you of how much fear is in the market these days. It's a real gut check, but that fear is creating incredible opportunities for investors patient and diligent enough to search for the babies thrown out with the bathwater.

Using our Motley Fool CAPS ranking system's screening tool, I scanned for bargain companies with the following characteristics:

  • Five-star ratings, since they are the best of breed.
  • Trailing dividend yields of at least 3%.
  • Price-to-book ratios no greater than 1.
  • Dreadful performance over the past 26 weeks. Yes, most stocks meet this condition, but I'm looking for the big crashers. The complete capitulators. The mothers and fathers of all bargains.

Among others, I dug up these stocks, which have been shredded to such paltry levels that it's hard to keep ignoring 'em:


Price Change


Price/Book Ratio

Ratio (TTM)

Euroseas Limited (NASDAQ:ESEA)





NamTai Electronics (NYSE:NTE)





NYSE Euronext (NYSE:NYX)





Precision Drilling Trust (NYSE:PDS)





Sotheby's (NYSE:BID)





Data from Motley Fool CAPS as of Jan. 8, 2009. TTM =  trailing 12 months.

None of these are necessarily recommendations -- just good starting points for you to dig a little deeper. You can rerun an update of this screen yourself.

Sell! Buy! Sell! Sell! Buy!
Three of the top 11 largest percentage-moving days since 1928 occurred this past October. Volatility was everywhere, day after day after day. Nothing was spared, not even NYSE Euronext, a company that should conceivably thrive off of the volatility. TMFZahrim put it best when he wrote back in October, "Hyperactive markets mean lots of trading, and [NYSE Euronext] takes a cut of every trade. That's why this crisis is great news for the exchanges themselves."

Nevertheless, shares are down about 66% in the past year, erasing most of the substantial gains the exchange logged in the past few years.

And you know what? Good riddance. The stock was overvalued and overloved to begin with. Shares traded at more than $100 a pop in late 2006 -- a year that produced just $1.36 per share in net income.

Thankfully, that endless optimism is long gone. As my Fool colleague Alex Dumortier put it in late October:

NYSE Euronext's stock has spent much of the last two years being substantially overvalued. Now is not one of those times: With the most pessimistic analyst calling for the company to earn $2.99 next year, the stock looks positively attractive at approximately 10 times that estimate.

Valuation? Check. Fears of further price erosion spell more opportunity, especially with the stock's rock-solid balance sheet. I can think of several other reasons to like this stock.

  • A moat like no other: The barriers to entry in the exchange market aren't just tough, they're as close to impenetrable as it gets. There's Nasdaq OMX (NASDAQ:NDAQ), CME Group (NASDAQ:CME), and a smattering of other competitors, but NYSE Euronext is hands down the biggest and baddest of them all. Take a market leader in an industry where competitive threats are scarcely confronted, and the outcome's rarely disappointing.
  • Opportunity in credit-default swaps: After the credit-default swap (CDS) market by and large imploded in 2008, investors and regulators finally realized these financial time bombs need to call a centralized clearinghouse their home. A partner of NYSE Euronext's Liffe derivatives unit was recently granted permission by the SEC to operate a CDS exchange in the U.S.
  • Weak dollar hedge: Thanks to the merger with Euronext, fully 70% of operating income came from nondollar currencies during the nine months ending Sept. 30. So long as the U.S. government continues to lob mountains of cash at every conceivable problem it can find, a long, sustained drop in the dollar's value seems plausible. Provided the dollar declines in relation to the euro and pound, a company like NYSE Euronext stands to benefit.

You take it from here
Our CAPS community is digging through the carnage in search of opportunities like NYSE Euronext and a slew of others. In fact, more than 125,000 investors use CAPS to share their opinions on more than 5,000 stocks. Click here to give it a try. It won't cost you a dime.

Further Foolishness:

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Precision Drilling and Nam Tai Electronics are Global Gains selections. Sotheby's is a Motley Fool Hidden Gems pick. NYSE Euronext is a Rule Breakers recommendation. The Motley Fool wrote puts on Nasdaq OMX. The Motley Fool is investors writing for investors.