"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 -- the highest our CAPS community offers.
  • Trailing dividend yields of at least 3%.
  • Price-to-book ratios no greater than one.
  • 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 five, which have been shredded to such paltry levels that it's hard to keep ignoring 'em:


Price Change



Current year consensus
earnings estimates

Allegheny Technologies (NYSE:ATI)





Industrias Bachoco (NYSE:IBA)





Ingersoll-Rand (NYSE:IR)





Tata Motors (NYSE:TTM)





Ternium (NYSE:TX)





Data from Motley Fool CAPS, Yahoo! Finance, as of Feb. 12, 2009. Price change from 8/15/08 to 2/11/09. Yield might have changed with recent corporate events.

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, if you like.

Contrarian's dream
I can think of several reasons why you shouldn't own Ingersoll-Rand. It makes industrial goods while the industrial economy has one foot in the grave. It's basically just United Technologies (NYSE:UTX) with several coolness factors removed. It just reported a $10.27 per share quarterly loss on a massive writedown. No one knows when the global economy will turn. Run. Hide. Nothing good to see here.

Then again, the bargain-hunting side of me could just as easily point out perhaps more convincing arguments for why you should be buying Ingersoll. I could start by noting that it's paid a dividend every quarter since 1919, or that Warren Buffett was buying shares last year at prices far higher than you can buy today, but a more relevant statistic sticks out: Ingersoll's recent quarterly loss was largely due to a non-cash charge related to a goodwill impairment. Continuing operations actually blew analyst expectations out of the water. 

And guess what? Shares surged almost 14%. This tells me one thing: analyst expectations of doom, gloom, pain, and punishment are both overblown and fully priced in after last year's 62% nosedive. Our CAPS community has agreed for a while. As kevinwinter wrote way back in November:

Am I missing something here? Below book, cheeeep p/e, cash and reasonable debt, solid mgmnt. And their brands- American Standard, Trane, Bobcat, etc.- may see pressure during the recession, but as soon as the belt loosens (or the old one breaks), these trusted and reputable names will be at the top of the shopping list. They are strong enough to expand their share during the downturn. Again, I'm not going to try to guess the next 12 months, but these businesses at this price seems an impressive deal.

I'd look at Ingersoll in the same way I would a stock like Alcoa (NYSE:AA), which is currently about as unattractive as it gets, but consider these three factors:

  1. Both are industries with long-term durability as opposed to fad products. 
  2. Both survived the Great Depression, which seems to be an increasingly important metric these days.
  3. Both have recently traded at their lowest levels in well over a decade. 

For patient, long-term investors that want to let history do the talking, a tried-and-true company, with a 4% dividend and trading at these levels, can be a rare gift.

Take it from here 
Disagree? See it in another light? Just want to see what the rest of the pack is saying? More than 125,000 investors use CAPS to share ideas and swap opinions. Click here to check it out. It's 100% free to participate.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Tata Motors is a former Global Gains recommendation. The Motley Fool is investors writing for investors.