"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Of all of the Oracle of Omaha's orations, this one holds a special place in Foolish investors' hearts. When you're looking to bag a bargain, a panicked sell-off by jittery investors offers a great chance to buy stocks on the cheap.

In the short term, professional traders' pessimism can become a self-fulfilling prophecy. When desperate institutions lower their asking prices to get rid of a stock, buyers' bid prices fall in tandem and create the very price decline that both sides feared in the first place -- until the selling stops.

Until it does, savvy investors can "get greedy," by snapping up bargains -- assuming they really are bargains -- from these fearful sellers. In today's column, we'll see which stocks Wall Street's motivated sellers are most frantic to unload. Once we've compiled this shopping list of potential picks, we'll check them against the collective intelligence of Motley Fool CAPS.

Today's contenders include:


Recent Price

CAPS Rating (5 stars max.)

Methode Electronics  (NYSE:MEI)



Wells Fargo  (NYSE:WFC)



Bank of America  (NYSE:BAC)



State Street  (NYSE:STT)






Companies are selected from the "Institutional Ownership Down Last Month" list published on MSN Money on the Saturday following close of trading last week. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Fear and self-loathing in the Big Apple
If there's one thing our bankers really hate these days, it is ... themselves. Four of the five companies making today's "short" list are banks. But what's this name at the top of the list? Methode Electronics? Never heard of 'em -- but that's easily fixed.

The bull case for Methode Electronics
According to CAPS: "The Company manufactures component devices worldwide for Original Equipment Manufacturers of automobiles, information processing and networking equipment, voice and data communication systems, consumer electronics, and industrial equipment."

Ordinarily, you wouldn't expect parts makers to fare well in a recession. But regardless of how the business fares, as of this writing, only one out of 29 CAPS All-Star investors polled expects Methode's stock to underperform the S&P 500 from this price onwards. To the contrary ...

And how cheap is cheap? Right now, Methode sells for the low, low price of just 5.6 times earnings. Such a valuation probably offers investors today a sizeable margin of safety on their investment.

Sure, pessimists may well be right in thinking that Methode's business will suffer along with those of its customers, as the recession deepens. Everyone knows that Ford (NYSE:F) and Chrysler are in crisis, and industrial companies such as Diebold (NYSE:DBD) are struggling as well. The worse their sales, the less their need to buy electronics parts from Methode.

But here's the thing: Methode has more than $50 million in cash on its balance sheet, against zero long-term debt. Better still, the company's generating free cash flow of nearly $47 million per year -- nearly half again what it reports as "net income" under GAAP, by the way. With a cash stash this large, and being replenished at this rate, I'm sure Methode will profit when times turn good again. Meanwhile, the company's paying you a fat 5.9% dividend for your patience.

With a balance sheet this strong, a price this low, and a simply drool-worthy dividend, this one can certainly go on the short list for investable companies.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Methode Electronics -- or for that matter, even what our CAPS members think. What we really want to know is whether you would bank on the stock. Click on over to Motley Fool CAPS, and tell us what you think.

Motley Fool CAPS : It's fun, it's free, and it just might make you famous.

Bank of America is a former Motley Fool Income Investor recommendation. Diebold is an Inside Value selection.

Fool contributor Rich Smith owns no shares of any company named above. You can find him on CAPS, pontificating under the handle TMFDitty, where he's ranked No. 1,247 out of more than 125,000 members. The Fool has a disclosure policy.