"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? Despite the recent rally, fear still permeates the economy. It's a real gut check, but that fear is creating opportunities for investors patient and diligent enough to search for the babies thrown out with the bath water -- an invariable product of crashing markets.

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.
  • Estimates of profitability in the year ahead.
  • Terrible performance over the past 52 weeks. Yes, almost every stock meets this condition, but I'm looking for the bargain opportunities. Not stocks that have simply fallen in price, but stocks that are cheap.

Have a look:

Company

52-Week 
Price Change

Recent Price

Forward P/E Ratio

American Oriental Bioengineering (NYSE:AOB)

(36%)

$4.87

6.06

Arcelor Mittal (NYSE:MT)

(45%)

$34.36

12.0

Burlington Northern Santa Fe (NYSE:BNI)

(17%)

$81.70

14.55

Terex (NYSE:TEX)

(57%)

$16.00

N/A

Valero Energy (NYSE:VLO)

(44%)

$18.23

9.16

Data from Motley Fool CAPS and Yahoo! Finance, as of Sept. 2, 2009.

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

A closer look at Arcelor Mittal
These are not happy days in the steel industry. Arcelor Mittal, along with rivals like U.S. Steel (NYSE:X), Nucor (NYSE:NUE), and other metal giants like Alcoa (NYSE:AA), saw everything go wrong in 2008: Global trade tanked. Building stopped. The auto industry imploded. Commodity prices plunged. Financing evaporated. Everything. Went. Wrong.

And it's still bad out there, but the cliff-diving of global economies looks to have petered out. Nothing to necessarily cheer over, but less to worry about. The recession has stopped getting markedly worse, and that, by way of pent-up demand and restocking, could ultimately re-energize companies like Arcelor Mittal, as CAPS member v12golfcart writes:

Mittal knows steel, and he runs some of the most efficient mills out there; when industrial activity picks up again, [Arcelor Mittal] is going to come back with a vengeance. Recent quarters have shown that the leverage situation (one of the major reasons for depressed prices) is no longer an issue as [Arcelor Mittal] has been able to successfully refinance large portions of their debt.

All fine and well. The question, then, is when industrial activity will start to pick up. Trying to forecast this stuff with any precision is a (small-f) fool's game, but industrial production numbers from the Federal Reserve show what could be the early signs of a dying recession:

Month

Month-Over-Month Change in Industrial Production

February

(0.8%)

March

(1.6%)

April

(0.7%)

May

(1.1%)

June

(0.4%)

July

0.5%

Source: Federal Reserve.

One month doesn't make a trend, but these are encouraging signs.

But, really, let's forget America. Arcelor Mittal is more of an international story than an American one. Sales are somewhat skewed toward non-American countries, many of which have either already officially exited recession, or are still growing at a healthy clip:

Geographical Segment

2008 Sales

Americas

$40.9 billion

Europe

$67.4 billion

Asia & Africa

$16.4 billion

Broad international exposure, more than anything, is what makes Arcelor Mittal an exciting story. As CAPS member GenevaProdigy wrote nearly three months ago:

This is a strong buy.

My reason? simple. As more evidence shows that the recession is moderating, and also signs that the demand for steel will increase due to explosive growth in BRIC and other developing nations, I believe that this will be a fortune maker. Arcelor Mittal is the largest steel company in the world and if any steel maker were to profit from rising demand, this will be it. This company has huge moat due to its sheer size.

You take it from here
Have your own take on Arcelor Mittal? More than 140,000 investors use CAPS to share ideas and swap opinions. Click here to check it out and speak your mind. It's 100% free to participate.

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American Oriental Bioengineering is both a Motley Fool Hidden Gems and Global Gains recommendation. The Fool owns shares of that company, plus some of Terex. Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.