We found some interesting investment ideas today that we are considering for our portfolio. As usual, we decided to share these ideas with readers. These 5 ideas represent a very small part of our current watch list. We hope to profile our entire watch list, over the next year, in many similar list articles. Hopefully, this article will bring some new ideas to our readers' attention.

Our screening criteria is based on valuation (PE ratio) and our own opinion about a company's future prospects. The following stocks were selected by performing a stock screen for low PE ratio stocks, in the 5 to 11 PE range, and then doing some investigating of the individual companies to find 5 companies that may be good investment candidates. This process is somewhat subjective and is based on our opinion of a company's valuation and our opinion of catalysts that may drive a company's

We were discussing some investment ideas today and we thought that it would be nice to share some of these ideas with readers. In general, we are cautious of today's markets but we are still looking for value even as the markets continue to reach new highs. However, we would wait for a market correction before committing significant capital to the stocks discussed in this article.

Homeowners Choice, Inc (HCI)

Homeowners Choice is a property insurance company that operates in Florida. The firm specializes in renters and homeowners insurance in the lucrative Florida property insurance market. We believe that Homeowners Choice has a very strong balance sheet and is selling for an attractive valuation. Homeowners Choice has a market capitalization of $359 million with a net cash position of $239 million (66% of market cap). Also, Homeowners Choice has inexpensive valuation ratios with a TTM PE ratio of 8.15, a

We often look not only for the best stocks the markets have to offer but we also look to avoid the worst stocks the markets have to offer. Theoretically, if an investor was to buy only the best 400 out of the 500 S&P 500 stocks, by excluding the worst 100 stocks, he could consistently beat the market. We believe that knowing what stocks/sectors to avoid is half the battle when it comes to getting good risk adjusted returns.

One stock, which we would avoid, is Range Resources (RRC). Range Resources is primarily a natural gas exploration, development and production company with assets in the Marcellus Shale and Appalachian Basin of the United States. In general, we are avoiding the natural gas sector because we fear that it may take many years for the supply/demand characteristics of the industry to come into better balance thus supporting higher natural gas prices.

Recently, we have been considering adding some value stocks to our investment portfolio. The following stocks caught our attention and we have decided to share these ideas with our readers. These companies have strong balance sheets and cheap valuations. We are having trouble finding good value plays in today's markets but we think that the stocks discussed in this article may fit our investment criteria.

CalAmp Corp (CAMP)

CalAmp markets and develops wireless communications solutions for video, voice and data network communications. CalAmp has a market capitalization of $359 million and a net cash position of $58 million. We believe CalAmp is cheap with a PEG ratio of 0.77, a TTM PE ratio of 8.07, and a forward (2014) PE ratio of 12.79.

In recent years, CalAmp has changed its business focus from a network hardware company to a services/software company. Particularly, CalAmp is growing its software/services business through acquisitions.

Recently, we have been considering adding some small capitalization stocks to our investment portfolio. Small cap stocks are very risky but we would like to take a small portion of our investment portfolio and invest it in a highly-diversified basket of undervalued small cap stocks. When we look at small caps, we look for companies trading at cheap valuations that have a stable business and a solid balance sheet. We avoid small caps trading below a $1/share or below a market cap of $100 million. In our opinion, shares below this threshold tend to be too illiquid, too volatile, and generally not worth the risk. In general, we feel that the small cap market is one of the few places where individual investors can get an edge over the large asset managers. We believe that the small cap market has some inherent market inefficiencies that can benefit diligent investors. The

We were looking at some attractively priced small-cap stocks yesterday and decided to share a few of these small-cap ideas with readers. When we look at small caps, we look for companies trading at cheap valuations that have a stable business and a solid balance sheet. We avoid small caps trading below a $1/share or below a market cap of $100 million. In our opinion, shares below this threshold tend to be too illiquid, too volatile, and generally not worth the risk. If this post reaches a wide enough audience, we may continue to cover the small-cap space in future articles.

Stewart Information Services Corp (STC)

STC is a real estate transaction management and real estate information services company. STC is primarily in the title insurance business with offices/agents in the United States as well as the U.K., Europe, Mexico, Canada, Central America, and Australia. Title insurance is

We believe that United Technologies (UTX) is well positioned to benefit from the improving economies of the United States and the emerging markets. As the housing market in the United States improves, we believe that United Technologies' UTC Climate, Controls & Security segment will prosper as new construction dives demand for its Carrier brand HVAC products. Similarly, increasing international demand for elevators driven by China's continuing building boom should bode well for United Technologies' Otis segment. Much of the construction in China is of high-rise residential/office buildings that use large numbers of Otis' elevators. Also, we see very positive trends in the aerospace area with Boeing's 787 and Lockheed Martin's F-35 production set to ramp-up in the near future. United Technologies is a major suppler to both of these programs and it should enjoy steady profits from its collaboration with Boeing and Lockheed Martin. With these positive trends and the

USG Corp (USG) is a leading distributor and manufacturer of construction products for both residential and nonresidential construction, repair, and remodeling. The most important of these products are USG's SHEETROCK brand gypsum drywall/joint compound and other associated construction products. Most of USG's revenues come from the United States (77% of revenues) and Canada (12% of revenues). The last recession severely damaged the profitability of USG's drywall business. However, with the recent improvement in the U.S. housing market, USG is seeing some significant improvement in its drywall business. In 2012, USG experienced its first increase in drywall unit volume since 2005. Also, in 2012, USG was able to raise drywall prices (17% increase over 2011) for the first time since 2006. Both of these milestones bode well for USG's future profitability as the U.S. housing market continues its slow but steady recovery.

We believe that much of this improvement is

Cigna Corp (CI) is a United States based, global provider of employee benefits services. Services provided are a wide variety of group insurance plans that cover benefits such as health, dental, life, disability, and pharmacy benefits. We believe that Cigna is a solid insurance company with many long-term trends working in its favor.

First, starting in 2014, the new Obama Care legislation will go into effect in the United States. Implementation of this legislation should increase enrollment (and profits) for Cigna as more people gain access to health insurance. Second, an ageing population in the United States should also bolster Cigna's lucrative supplemental insurance business as more people enroll for Medicare and Medicaid benefits. Cigna is growing this part of its business by expanding geographically with its latest acquisition of Health-Spring, in January 2012, bringing in about 850,000 new Medicare Part D members. Third, we believe that Cigna's operations

Executive Summary

United States-based Valero Energy (VLO) is the largest independent marketer and refiner of petroleum products in the world. We are interested in Valero for three primary reasons: Valero is spinning off its retailing business, Valero is well positioned to benefit from increasing shale oil production, and Valero shares are cheap at the current price. In our opinion, Valero shares are trading at a significant discount to fair value which we place at about $52.00.

Business Description

Valero operates three primary business segments which are Refining, Retailing, and Ethanol. Valero's Refining segment consists of 15 petroleum refineries located in Canada, the United Kingdom, and the United States. These refineries produce gasoline, jet fuel, diesel, lubricants, distillates, asphalt, petrochemicals and other refined products. Other services supplied by the Refining segment are transportation of petroleum products, distribution and supply of petroleum products, and the wholesale marketing of petroleum products. The

We believe that Cummins (CMI) is a good value at today's price. In recent quarters, Cummins has had some issues with declining profits/revenues but we believe this short-term problem has created a good value for long-term investors. Although truck engine sales have been weak as of late, we see some positive trends that may bode well for Cummins. These trends are the growing need for low emission diesel engines to meet new emissions standards in many parts of the world and the growing need for reliable electrical power in many parts of the developing world.

The first trend that we find interesting is that many governments around the world are implementing new emissions standards for diesel engines. As these new laws go into effect, Cummins should see improving sales of its high-tech low emission diesel engines. We believe that Cummins is better positioned than its competitors to meet

Potash Corporation of Saskatchewan (POT) also known as PotashCorp is a Canadian fertilizer company with the largest integrated fertilizer production operation in the world. PotashCorp operates three major business segments Potash, Phosphate, and PCS Nitrogen.

PotashCorp has the world's largest potash operation based on capacity. In fact, PotashCorp's potash operation accounts for about 20% of world capacity and 17% of world production. The international potash business has relatively few players which are located in Belarus, Canada, Germany, Israel, and Russia. Canada is the largest single player with about 30% of total world capacity coming mostly from the Saskatchewan region. Potash is an important fertilizer which supplies the critical element Potassium to growing crops. About 90% of potash production is used for fertilizer with the rest going into the production of drilling mud, de-icers, water softeners, food products, and soap. The Potash segment's revenues account for about 42% of PotashCorp's total

Anadarko Petroleum (APC) is a large, United States based, crude oil and natural gas exploration and production company. The firm markets, processes, produces, develops, and explores for crude oil, natural gas, and natural gas liquids. Most of Anadarko's revenues come from onshore United States as well as deepwater operations in Algeria and the Gulf of Mexico. Other deepwater operations include operations along both coasts of Africa, Brazil, China, Indonesia, and New Zealand. Proved oil and gas reserves were 2,560 million barrels of oil equivalent BOE in 2012 with a reserve mix of 46% liquids and 54% natural gas. Production was 268 BOE in 2012 which is an increase of 8% compared to the prior year. During 2013, Anadarko plans to spend about $5.5 billion on onshore capital expenditures in the United States. Major projects are planned for East Texas, Permian Basin, Eagle Ford Shale, and Wattenberg field. Due to low

Aetna (AET) provides a broad array of consumer-directed, traditional, and voluntary health insurance products as well as group insurance products and retirement asset management services. Three business segments provide the majority of Aetna's revenues and they are Large Case Pensions, Group Insurance and Healthcare.

Large Case Pensions provides about 1.4% of Aetna's total revenues. Through this segment, asset management services are provided to defined contribution and defined benefit plans. Products include annuities and pensions. Aetna has not promoted this segment since 1993. Furthermore, this segment is in a run-off situation where Aetna is not actively seeking clients but is managing existing clients' assets. Group Insurance accounts for 6% of Aetna's total revenues and provides group long-term care, group life, and group disability insurance products. The Healthcare segment is Aetna's largest segment generating 92.6% of Aetna's total revenues. This segment markets health indemnity benefit products, preferred provider organization PPO, point-of-service POS,

Automatic Data Processing (ADP) is the largest provider of payroll outsourcing services in the world. Additionally, ADP provides services such as data progressing, benefits administration, tax filing, and human resources outsourcing. Employer Services and Dealer Services are the two primary business segments that account for the majority of ADP's revenues.

Employer Services provides services such as payroll, human resource, tax filing, reporting, and benefits administration services to over 570,000 customers in Asia, Australia, Brazil, Europe, and North America. Dealer Services is a global provider of professional services, data products, and transaction systems to automobile/truck dealers and manufacturers.

We believe that ADP has a very solid, high return on capital business that does not require significant capital investments to grow. ADP has a few headwinds hurting its business with high unemployment rates in many of its markets affecting its Employer Services segment and low auto sales in Europe affecting its Dealer

Manitowoc Company (MTW) is a manufacturer of commercial foodservice equipment and industrial cranes. As a global company, Manitowoc derived 56% of its total revenue from overseas sales. Europe is Manitowoc's largest overseas market with Europe accounting for about 22% of Manitowoc's total sales.

Manitowoc's crane division accounts for about 62% of total sales. Products manufactured in the crane division are boom trucks, tower cranes, mobile telescopic cranes, and a broad line of lattice-boom crawler cranes with capacities up to 2,500 U.S. tons. Other sources of revenue for the crane division are crane maintenance services, crane repair services, and the sale of repair parts for cranes.

The foodservice division accounts for about 38% of Manitowoc's total revenues. This division sells essentially every type of equipment needed to equip a commercial kitchen. These products include stoves/ovens, food warmers, commercial ice makers, commercial freezers/coolers, commercial dishwashers, beverage dispensers, food serving/storage equipment, and a

AK Steel (AKS) manufactures flat-rolled carbon, electrical, and stainless steel for steel distributors, auto manufacturers, construction companies, appliance manufacturers, and electrical power generation companies. AK Steel specializes in the manufacture of both hot-rolled and cold-rolled premium quality steel. Also, AK Steel manufactures welded tube steel for the construction and automotive markets.

The distribution/service center market accounts for about 39% of total revenues. Automotive manufacturers account for about 36% of total revenues. Steel for the general manufacturing/construction markets account for the remaining 25% of total revenues. AK Steel's main competitors, in its most profitable markets, are United States Steel (X), North American Stainless, Arcelor Mittal Steel (MT), and Allegheny Technologies (ATI).

AK Steel focuses its business on customers that need the highest quality steel as well as technical support and precisely timed deliveries to support just-in-time manufacturing operations. By catering to the specific needs of its customers, AK Steel has made

Fastenal (FAST) provides supplies to construction and industrial customers through its network of over 2,600 stores. Fastenal operates a global business but the vast majority of its business is in the United States (90% of total revenues) with smaller operations in Canada and Mexico. The most popular product sold in Fastenal's stores is threaded fasteners which account for about 42% of total revenues. With nearly 500,000 different types of industrial/construction supplies Fastenal is a major supplier to manufacturing, maintenance, repair, and construction companies. Fastenal has a diversified customer base with no single customer representing a significant portion of total sales. In addition to its stores, Fastenal also operates vending machines (dispenses fasteners) and small stores (not counted in the store count) within major customers' manufacturing facilities to cater to the specific needs of these large customers.

In the future, Fastenal plans to eventually operate about 3,500 stores in the United

FedEx (FDX) is a global provider of time-sensitive package and freight delivery services serving the delivery needs of individuals and businesses in over 220 countries. With over 54,000 delivery vehicles, 660 aircraft, and over 58,000 drop-off boxes, FedEx is the second-largest global package delivery service in the world. FedEx operates four primary business segments which are FedEx Express, FedEx Ground, FedEx Freight and FedEx Office.

FedEx Express accounts for 62% of FedEx's total revenues and this business segment's revenues are an almost even mix of Domestic (United States) and International business (52% and 48% respectively). FedEx Express is the world leader in guaranteed time of delivery freight, package, and document delivery services. Guaranteed time services include overnight, same-day, and deferred delivery of freight, packages and documents. One important aspect of FedEx Express' international business is its operations in China. With 30 weekly flights into China and a delivery network covering

With 1.1 trillion in assets under management, Prudential Financial (PRU) is one of the largest financial services companies in the world. Prudential is based in the United States, but has operations across the globe in Asia, Europe, Latin America, as well as the United States. Three divisions comprise the bulk of Prudential's revenues, International Insurance, U.S. Individual Life and Group Insurance and U.S. Retirement Solutions and Investment Management.

The International Insurance division is responsible for about 36% of Prudential's total revenue. Products provided are individual life insurance, fixed-benefit health insurance, and retirement planning services. Prudential operates a significant life insurance business in affluent areas of Japan and Korea through its Life Planner operation. Insurance aimed at the middle class in Japan is sold through Prudential's subsidiary Gibraltar Life using Life Advisor agents.

Prudential's U.S. Individual Life and Group Insurance division comprises about 11% of total revenues. The Individual Life unit