America's Next Top Value Stock

Though value investors have been some of the most successful investors out there, finding good stocks at bargain prices is far from easy. Though markets aren't as efficient as some university professors may want to tell you, they generally do a pretty good job pricing stocks. So while there are good deals out there, you're going to have to break a bit of a mental sweat if you want to make sure that you're investing in the stock equivalent of Brad Pitt, not Kato Kaelin.

Fortunately for us, in the search for stock market values, we have the 135,000-plus members of The Motley Fool's CAPS community voting on which stocks are true stars and which are just posers. To gather some ideas, I've dug up a handful of companies valued at less than twice their book value -- a measure often used by value investors. Below is a selection from the array of companies that fall into this category; you can run the same screen that I did on the CAPS screener for the bigger picture.

Sources: Capital IQ, a division of Standard & Poor's, Yahoo! Finance, and CAPS as of July 17, 2009.

As you can see by their star ratings, though these stocks all carry value-like multiples, the CAPS community doesn't think that all are worthy of your investment dollars.

No twinkle in these stars
Housing? In short, no. D.R. Horton, along with many other homebuilders, carries hefty amounts of land and housing inventory, and investors are still concerned that the value of that inventory could face writedowns. That's not to mention that the business of building new homes could be a Sisyphean task for years to come.

Shaw Group provides engineering and construction services for major projects like nuclear power plants and oil refineries. Though CAPS members have afforded high ratings to Shaw competitors like Foster Wheeler (NASDAQ:FWLT) and Fluor, Shaw has managed to score only three stars out of five.

Valuation was one concern cited by CAPS members, although recent performance -- including missing earnings expectations in its fiscal third quarter -- hasn't helped matters.

Medical-device maker Boston Scientific joins Shaw in the three-star ranks. One of the issues frequently highlighted by CAPS members giving the stock a thumbs-down is the amount of selling that insiders at the company have been doing over the past few years.

A five-star is born!
I find it easy to tick off the myriad reasons to keep my distance from General Electric -- with its unwieldy and underperforming financial arm towering at No. 1.

Deep Blue Sea may have been a lousy movie, but Tom Scroggins got one thing right when he said: "Now you see how that works? She screwed with the sharks, and now the sharks, they're screwing with us." Messing around with the sharks of the financial world has worked out about the same for GE.

Fear of deep-sea financial monsters aside, CAPS members have identified a number of reasons to be bullish on GE, including the company's business diversification, the strength of its core industrial operations, and the vote of confidence the company got from Berkshire Hathaway (NYSE:BRK-A).

But GE's four-star CAPS rating still left it one star short of taking the top spot for this week's competition. Instead, the top value stock title goes to Teck Resources. Vancouver-based Teck brings smiles to its investors by finding and extracting natural resources -- primarily copper, zinc, and coal.

CAPS All-Star and emphatic Teck bull TMLonggun thrust a thumb up on Teck's stock last December and expanded on why last month, by pointing at the specter of inflation:

Commodities mega bull fueled by inflation. When the value of money is eroded by inflation it will flow into hard assets and commodities namely Teck's chief products. The world NEEDS these resources and what is not consumed by America will be sucked up by the rest of the world. Very low P/E. Epic buying opportunity.

Make your vote count!
I've already given Teck Resources an outperform rating in my CAPS portfolio, but what do you think? Do you agree that Teck could be America's next top value stock? Click over to CAPS and let the rest of the community know what you think. And while you're there, you can log your vote for the other stocks that you think should be in the running.

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