Of all the tidbits of insight I've heard over these past few crazy months, the most telling came from an investor who appeared on CNBC last fall and, being completely serious, advised, "There're only two positions to be in right now: cash, and fetal."

Panic, anyone?
I get it. It's brutal out there. Many companies that overleveraged their balance sheets are permanently impaired and will likely never rebound -- banks and leveraged retailers come to mind. We had an unprecedented boom; now we're in the middle of an unprecedented bust.

Nevertheless, history tells us time and time again that market panics and forced sell-offs indiscriminately throw the good out with the bad. Amid the frenzy over financial markets and the "sell-now-ask-questions-later" mood of global investors, opportunities are being created for bargain-hunting investors like we haven't seen in decades.

Using the wisdom of our 125,000-member-strong Motley Fool CAPS community, I've come across what could be one of those bargain opportunities, Microsoft (NASDAQ:MSFT).

CAPS Rating (5 max)

***

1-Year performance

(41%)

Recent share price

$16.42

2009 EPS estimates

$1.77

TTM EPS

$1.88

Market cap

$146 billion

Total cash & short-term investments

$20.3 billion

Total debt

$2 billion (short-term borrowings)

Fools bullish on Microsoft are also bullish on:

General Electric (NYSE:GE)

Google (NASDAQ:GOOG)

Fools bearish on Microsoft are also bearish on:

Dell (NASDAQ:DELL)

Ford Motor (NYSE:F)

Data from Motley Fool CAPS and Capital IQ, a division of Standard & Poor’s, as of Feb. 26. TTM = trailing 12 months. EPS = earnings per share.

Anyone can think of a dozen reasons to hate Microsoft. Apple (NASDAQ:AAPL) is slowly taking over the world. Jerry Seinfeld was the most pathetic response ever to the "I'm a PC" ads. A deal with Yahoo! (NASDAQ:YHOO)? How many times have we heard that one? I stopped paying attention after uncountable touch-and-goes. And, seriously, does anyone truly like Vista? I could go on.

All qualms aside, the underlying drivers of Microsoft from an investment standpoint are not only alive and well, but about as attractive as they've been in years. Mainly:

  • It's profitable like no one's business.
  • It still has a stranglehold on the PC operating system market.
  • Its balance sheet is bulletproof.
  • It's as cheap as it's been since the beginning of 1998.

Just how cheap? After a 41% plunge in the past year, shares now trade at less than 10 times forward earnings estimates. Very, very rarely in an investor's life will a world-class company with about as deep of a moat as you can ask for trade at levels otherwise associated with outgoing fads. Hate all you want; Microsoft is still powerful and profitable. As CAPS member rws1773 recently wrote:

I've been using Mac's for years and I continue to love every Apple product that I own. However, I've owned [Microsoft] for years and continue to love the stock. [Microsoft] has fantastic margins, no debt, and makes money hand over fist. ... The corporate and government customer is captive. The costs to migrate to either a Linux or Mac platform for the average large company is not feasible either in dollar terms or logistical terms ... Love them or hate them, long or short, doesn't matter...[Microsoft] is not going away anytime soon and will continue to post nice profits for many years to come. For most of us, using [Microsoft] products is just part of life. 

Mr. Softy currently has a market cap of under $150 billion, almost 14% of which represents cold, hard cash. When you strip out what you might consider excess cash, the effective earnings yield on this puppy is well over 10%. What more can you ask for from the world's largest software maker? An operating system with fewer bugs, maybe, but investors, nonetheless, are getting quite a bargain for their buck these days.

Your turn to chime in
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.

Further Foolishness:

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Microsoft and Dell are Inside Value picks. Apple is a Stock Advisor recommendation. Google is a Rule Breakers pick. The Motley Fool is investors writing for investors.