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The past few weeks have seen a tremendous push out of most risk assets into cash and treasuries. Investors are quite scared of the end of QE2, and see all stocks as roughly equal. During market panics, stocks are correlated nearly 1-1 on the way down. All issues have been sold off regardless of valuations in past crashes such as 2008, and investors should not assume that this time will be any different.

This type of high correlation sell-off provides value investors with solid opportunities to buy dollars for fifty cents. Value investors view sell-offs as gifts. They look at things like price to book value, low debt to equity ratios, low price to sales ratios, and high free cash flow per share. Most investors today simply look at the industry and at whether or not they like a given company's business model and prospects, regardless of valuation. It is this herd like mentality that picks the best business ideas that get the crowd into trouble in the stock market, as those who are willing to buy into extreme pessimism and sell into extreme optimism are rewarded over the longer term. Warren Buffett was a contrarian for much of his career, buying shares of American Express when everyone thought they were going bankrupt due to a bad Salad Oil trade.

Here are 20 investment ideas that might be timely buys if the risk asset market finds a bottom. Most likely, QE2 has simply created Stagflation and has not created any jobs, so a push for more QE will be met with sharp criticism. In other words, these ideas are likely good longer term investments, but in the shorter term the markets could head a lot lower. Keep an eye on the 200 day moving average at around $1255 on the S&P 500. If the 200 day holds, expect a bounce as markets usually get an oversold bounce off of a major support level such as the 200 day, which has not been tested in months.

StockForwPEP/BKP/FCFP/SLTD/Eq.EV/EbitIValueEst.
NWLI7.42NA.7NANA350
HAST16.353.2X.07X.25X2.3X16
VOXX7.2X.42X5.5X.30X.10X4.83X$16
FCX7.95X3,42X11X2.32X.50X4.63X$70
STO7.80X1.85X30X.78X1.30X2.30X$45
VALE6.062.11X20X2.76X.60X5.25X$50
HPQ6.60X1.84X9.5X.60X1X1.72X$60
TOT6.72X1.37X20X.57X.90X3.23X$75
MSFT8.65X3.76X9.2X2.94X.4X5.52X$40
GBRNA.25X15X1.18X.20X11.2X$12
JASO4.26X.80XNA.40X.45X2.40X$18
RIMM4.90X2.4X4X.98XNA3.2X$90
KO15.50X4.67X18X3.96X.80X15X$80
CVX7.73X1.85X17X1.0X.40X4.35X$140
AIG5.66X.50XNA5.4XNANA$60
BAC6.20X.50XNA1.31XNANA$20
INTC9.05X2.45X10X2.50X.18X4.98X$35
AWXNA.25X8X..30X.20X7X$13
HSOL4.67X.53XNA.34X.20X2X$15
JBSS8X.49X6X.14X.35X7.36X$20

Remember, this is not a "buy list" but a starting point for investors to do their own homework on the above "cheap" names. Warren Buffett used to research hundreds of stock 10K's per week, so consider plowing through as many financial statements as possible before investing in any common stock. We look to buy cheap stocks at unreasonably low prices (hopefully well below liquidation value) and sell once a stock hits 80% of our intrinsic value targets or after a year or two if the fundamentals have changed dramatically for the worse. Investing in low price to book value stocks is best done with wide diversification. Also, the overall market may continue to sell off, so make sure to scale into your long positions using a dollar cost averaging approach.


Disclosure: I am long HSOL, KO, VOXX, JASO, HAST, NWLI, MSFT, CVX, FCX, GBR, RIMM, AWX, JBSS.

Additional disclosure: I may buy any of these stocks listed. this is not a recommendation to buy or sell any security.

Source: 20 Cheap Stocks to Add if Markets Hold 200 Day Moving Averages