The next industry to get hit is railroads -- unlike financials, this will not happen overnight. Until now, equity value of railroad operators has, for the most part, been preserved. However, current railroad valuations are not factoring in the impact of lower commodity prices and a hobbled manufacturing industry.

Take Norfolk Southern, Corp. (NSC) as an example. NSC's stock has more than tripled in the five year period from September 2003 to September 2008. The price increase can be easily attributed to manufacturing growth, a weaker dollar, an ethanol boom, and attractive coal prices. Total railway operating revenues increased 81% from quarter ending September 2003 to September 2008. Revenue from coal increased from $372 million to $876 million in the same time period, as did the total ratio of revenue derived from coal shipments. In 2003 coal accounted for approximately 23.3% of operating revenue but in 2008 coal made up 30.3% of total operating revenue.

Consider this: Finding new soldiers to fight an unpopular war is not only difficult, but it's costly. The U.S. Army offers an enlistment bonus of $20,000 for new recruits. Furthermore, over 28,000 American troops have been wounded in the Iraq and Afghanistan campaigns. The health care costs for returning soldiers are only really going to be felt in a few years.

In response, the military is starting to ramp up procurement of unmanned military vehicles that will soon start replacing our soldiers and pilots. There are a number of companies that will start generating impressive revenues from sales of new technology that will save American lives and dollars. Here are two examples:

Stan Berenshteyn & Dmitriy Vilenskiy submit: One of our favorite stocks to watch over the past two years has been Crocs Inc. (CROX). In retrospect, it should have been a pretty easy prediction that the product would catch on. Though we cannot go back in time, our hindsight can give us a better perspective about what makes a winning stock. We can look at high growth companies like Crocs, and use the elements that made them successful to help us isolate another potential winner.

The concept behind Crocs is fairly simple: produce very light, foam like footwear that is comfortable and convenient to wear. But when you take a look at the shoe, you can’t help but think; why didn’t something like this catch on a decade ago? The problem for some investors who did not cash in on the Crocs success story, however, is that getting in on it now seems very expensive.

A slew of quarterly reports are scheduled for the next few weeks, and this will set the tone for investor sentiment for the next few months.

Then came the downgrades. Verasun reported disappointing earnings due to rising corn prices and the analysts turned their backs on ethanol. Subsequently, ethanol has been on a slump, the three companies mentioned above have been down 39%, 37%, and 31% since their respective highs. I won’t downplay the concerns, many investors sold because of real worries about profit margins and oversupply, but it is becoming more and more evident that these concerns were overblown and that these stocks are undervalued at their current price levels.

When Salesforce.com announced a ‘major’ development with Google (GOOG) in late May, the stock surged on hype. The fact that the details of the partnership with Google were less than impressive did not deter CRM from trading in the high $40s range. After all, the stock has been climbing mostly on hype. Take a look at recent news on the company, and its full of conference presentations, speeches, and nebulous awards. The CEO and CFO have been doing a fabulous marketing job and Wall Street analysts have been eating it up. The substance of the company, however, is not as peachy as these headlines make it out to be.

It is amazing that a company with a P/E ratio of 3,660, yes three thousand six hundred sixty, can be adored for so long. Even with an optimistic growth outlook, forward P/E is at 150...what a bargain! Now imagine the wonders an economic slowdown will have on CRM’s stock performance. Every time I look at this chart I feel I am living in bizarro world. In fact, I started to adapt to the bizarro rules (society is ruled by the Bizarro Code which states, "Us do opposite of all Earthly things!”) When the stock hit close to $50 on May 30th, I became really happy, finally it has hit a pinnacle, and has no where to go but down. By June 25th, it was briefly under $40.