Investments in the bargain bin

(ticker: ETN)

As Warren Buffett is fond of saying, the best time to be a buyer of equities is when everyone else is selling. Well, one stock that certainly meets Buffett's criterion of being unloved -- and that the Oracle has been loading up on -- is an industrial manufacturer you may not have heard of: Eaton Corp. Its price has plummeted more than 50% over the past year, and it's now trading at a price/earnings ratio of 6, compared with 12.4 for the S&P 500. According to a recent filing, Buffett's firm, Berkshire Hathaway, bought 3 million shares in the six months ended in September. Many pros think Eaton's recent sharp price decline makes the stock extremely attractive relative to the firm's earnings prospects. For example, Goldman Sachs analyst Terry Darling, who rates the stock a buy, expects Eaton's earnings to soften a bit in the next two years as the economy struggles. But he says the cheap stock price more than reflects that weakness.

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