Why Warren Buffett Is Buying: Methodology

How we chose the 10 companies that offer some hope for the economy.

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Here are the main criteria Zacks Investment Research used to identify 10 undervalued companies with sound operations and good prospects:

[ ] Market capitalization of $1 billion or more

[ ] Stock price greater than $5

[ ] Average 20-day trading volume greater than 100,000 shares[ ] Projected 2008 growth rate greater than the average for the S&P 500 stock index (compared with last year)

[ ] Projected 2008 growth rate this year greater than zero (compared with last year)

[ ] Projected 2008 growth rate greater than the company's five-year historical growth rate

[ ] 12-month price-to-earnings ratio less than the average for the S&P 500

[ ] P-E ratio / five-year high is less than 0.5. (In other words, the current P-E ratio is at least 50 percent lower than its five-year-high P-E ratio)

[ ] P-E ratio / five-year average is less than 0.5. (In other words, the current P-E ratio is at least 50 percent lower than its five-year average P-E ratio)