For investors brave enough to buy while the market's falling, below are a handful of stock ideas. The Dow Jones Industrial Average dropped 7% during the five trading days through Thursday. These shares lost at least that much, and they have a few promising attributes.

The first is a reasonable valuation. These stocks sell for 12 to 15 times forecast earnings for their current fiscal year, making them no more expensive than the broad market. There are two related benefits to that for investors. The first is that when the market falls, investors tend to become less hopeful about future earnings, and less willing to pay up for them, stocks with low price-to-earnings ratios usually (but not always) outperform during downturns. The second is that, as I noted last month, value stocks provide better returns in general, because investors tend to judge company flaws too harshly at first.

The second promising sign is a dividend yield that recently topped 3% as a result of share price declines. Dividends will prove valuable to stock investors if prices fall further. Those who receive them can continuously reinvest them at lower share prices, instead of merely hoping for gains.

 

AM Report:Global Markets Pounded by U.S. Downgrade

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The News Hub covers how global markets were impacted by S&P's downgrade of U.S. sovereign debt. Reporters in Europe, Hong Kong and The Middle East join the discussion. AP Photo.

The third sign might be useful for separating winners from losers if the economy stalls. As I noted in a column Thursday, corporate earnings are so high as to appear unsustainable relative to worker wages right now. Not all companies will suffer earnings declines, of course, but many might. The companies below have demonstrated remarkably stable earnings over the past five years. In ugly statistics jargon, they have a low coefficient of earnings variation. In plain language, they sell gasoline, beer, packaged food, home repair items and garbage collection services--things that tend to continue selling well even when the economy swoons.

Chevron Corp.

Price-to-earnings: 7
Dividend yield: 3.3%

Chevron (CVX) is ranked somewhere between No. 3 and No. 5 among energy companies, depending on whether the measure is stock market value, proven reserves or production. Analysts say the company has an advantage over peers in terms of the profitability of its reserves, and is now working to increase production. Its sales are expected to rise by 20% this year and 22% next year.

Molson Coors Brewing Company

Price-to-earnings: 8
Dividend yield: 3.0%

Beer isn't entirely recession-proof; the rise in unemployment has hit especially hard among workers in their young 20s, and these are key customers for beer makers. U.S. beer volumes have fallen 2% to 3% in recent months. Molson Coors (TAP) is making the best of things with packaging tweaks: aluminum pint bottles, cold-activated bottles, vortex-neck bottles and more. Don't expect rapid sales growth as a result, but the company's dividend looks plenty affordable.

Kellogg Company

Price-to-earnings: 15
Dividend yield: 3.2%

Last year was a difficult one for Kellogg (K), with a cereal recall, lost sales to Wal-Mart (WMT) and other costly stumbles. Sales slipped just 1%, however. This year, they're expected to rise 7%. The company has raised prices and also growing volumes, thanks for new products: Special K Cracker Chips, Thick n' Fluffy Eggo waffles, Pop Tarts Mini Crisps, and so on. The company says it will introduce $800 million worth of products this year, compared with $12.4 billion of total sales last year.

The Home Depot, Inc.

Price-to-earnings: 13
Dividend yield: 3.4%

Home Depot (HD) made the cut on a Monday screen for companies that are benefitting from the housing market. The real estate bubble that popped in 2006 created some deep problems for the economy, but it also left behind a million extra houses than would have otherwise been built. Most of those houses require upkeep, so plenty of companies that sell home and garden products are doing well.

Republic Services, Inc.

Price-to-earnings: 14
Dividend yield: 3.4%

Garbage-hauling isn't a fast growth business, or even a moderate-growth one. Republic Services (RSG) increases sales and profits mainly by raising prices now and then and keeping strict control of costs. It excels at turning trash into free cash; Wall Street expects the company to generate $900 million in surplus funds next year. That's 9% of the company's stock market value, which makes its recently raised dividend yield seem small by comparison. Last quarter Republic repurchased just over 1% of its shares.