Tuesday, October 27, 2009
Morgan Housel :: Townhall.com Columnist
5-Star Stocks Worth a Look
by Morgan Housel
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Despite the fierce rally, you can still findhigh-quality companies at great prices. And if you watch a few minutes of CNBC, read a few blogs, or talk to a few opinionated people, there's no doubt about it: Fear still isn't hard to find, either. That's great news for Fools on the hunt for great investments.

Using our  Motley Fool CAPS ranking system's  screening tool, I scanned for a few five-star-ratedcompanies -- the highest our CAPS community offers -- that might aid your bargain-hunting ambitions. Have a look:

Company

Recent Price

TTM Return on Equity

Forward P/E Ratio

3M (NYSE: MMM)

$76.82

24.24%

16.0

ChinaNatural Gas (Nasdaq: CHNG)

$12.28

24.7%

7.77

Flowserve (NYSE: FLS)

$104.09

28.08%

14.44

Diageo (NYSE: DEO)

$62.45

48.19%

11.81

Dolby (NYSE: DLB)

$43.88

21.61%

22.27

Fluor (NYSE: FLR)

$48.24

26.71%

13.47

UnitedHealth (NYSE: UNH)

$25.31

16.85%

8.22

Data from Motley Fool CAPS, Yahoo! Finance, and Capital IQ, a division of Standard & Poor's, as of Oct. 26, 2009.

None of these is necessarily a recommendation -- just a good starting point for you to dig a little deeper. You can rerun an  updateof this screen yourself, if you like.

A closer look at 3M
" 3M means make mucho money" said my Foolish colleague David Lee Smith yesterday. After 3Mdestroyed earnings expectations in the third quarter, I thought I'd see what our CAPS folks have to say.

Of the nearly 4,000 CAPS members rating 3M, fully 96% rate it as an outperform. You'll be hard-pressed to find a rosier consensus than that, so if you're looking for a contrarian indicator, there it is. Just remember that there are multiple reasons to give this company a long-term thumbs-up. Earlier this spring, CAPS member Treva23wrote:

'A diversified technology company....' that really says it all. They are amazingly innovative and are all about diving into new opportunities. They are going to benefit from Obama's stimulus, as well as the coming green trends and pretty much any other major trend that requires even the slightest of technical solutions

flymikefly04adds:

Still profitable in this down market. They have made wise decisions to set themselves up for future success. The dividend is strong and does not appear in any risk of getting cut.

And back in April, CAPS member PsychoDrwrote:

Generates huge cash flow, even with a down market. Well diversified, nice low PE, and best of all, not really expected to blow the doors off with earnings. What Jeremy Segal calls an El Dorado company. While I would never say a dividend is safe, the cash flow and the history indicate that [3M] is more likely than not to keep paying, and they might even raise it more.

Still, plenty of investors ask: What the heck does this company do? 3M may be mostly known for its iconic Post-It Notes and Scotch Tape, but in truth, it's hugely diverse:

Segment

Percentage of 2008 Sales Continued...

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About The Author

Morgan Housel is a Motley Fool contributor.

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