Three Good Companies for Next to Nothing

Even so, I still find some very favorable names sitting on heaps of cash.

Worth a closer look is KHD Humboldt Wedag(KHD Quote), an industrial engineering supply company. The company basically provides know-how in building and designing cement and coal and mineral plants all over the world. Today the stock trades at about $15, for a market cap of around $445 million. The company has a net cash position of $430 million, or about $14 a share.

Business still seems to be OK. The company earned 89 cents a share in the second quarter, but you should understand that it prospers from the growth in global infrastructure, which is likely going to slow down further. Nonetheless, the company continues to grow backlog, which stood around $1 billion at the end of June 2008. I don't depend on backlog in an environment where credit is all but gone to everyone except those who don't need it. Still, the company does business all over the world, and regions such as the Middle East have not been as severely hit.

Another little gem is Harvest Natural Resources(HNR Quote), an oil company trading for $7.50 a share, which has no debt and $4.50 a share in cash. For $3.50, or an enterprise value of $100 million, you get a business that earned $100 million in free cash flow in 2005, when oil prices were closer to what they are today. And let's face it, there will always be demand for oil. And just as OPEC doesn't want to see $150 oil, it doesn't want to see $60-a-barrel oil for a prolonged period of time, either.

Regardless, most oil companies are profitable at $60-$70 oil anyway. With Harvest you get 44 million barrels or proved reserves, worth $10 to $15 a share on a discounted basis, depending on the value per barrel you assign. With this resource base alone, the company is cheap, but it estimates $25 to $30 per share in possible and potential reserves.