7 growth stocks in the bargain bin

Everyone loves a bargain. Whether shopping at the grocery store, the local flea market or at the neighborhood car dealership, people inherently understand the benefits of great deals.

Yet despite this infatuation with bargain opportunities, it doesn't occur to many investors that buying cheap stocks is possibly the best way to squeeze a whole lot of bang out of a hard-earned buck. As legendary investor Christopher H. Browne writes in "The Little Book of Value Investing," we should always attempt to "buy stocks like steaks . . . on sale."

With the help of the CAPS community, I've tried once again to find some cheap stocks for all of my stingy kindred spirits.

• MSN CAPS: The wisdom of the investing crowd

We ran a simple screen for four- and five-star stocks with EV-to-EBITDA (enterprise value to earnings before interest, taxes, depreciation and amortization) multiples below 10.

We used this metric, rather than the more common price-to-earnings ratio, to account for differences in each company's capital structure. This screen helps us zero in on statistically cheap stocks that, according to our CAPS community, have plenty of great reasons to trade at much higher levels.

Let's dive right into this week's bargain bin:

* Enterprise value to earnings before interest, taxes, depreciation and amortization, as of June 11.

As usual, our list isn't brimming with the most exhilarating businesses. But that should be just fine with us -- boring stories often translate into the market's biggest returns.

The offshore solution

CAPS participants are drawn to the company's strong presence in Canada, its steadily growing global exposure and the way it seemingly flies under Wall Street's radar.

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CGI is in good financial shape, with about $80 million in cash, $438 million in debt and healthy cash flows, which have traditionally been used to buy back shares.

The company's founder and other managers have recently monetized a big chunk of their positions, which should normally give investors pause, but the stock is at least worth a closer look. CAPS player "estambar" explains why:

"Even though the leadership at this company recently 'capitalized' large portions of their positions, I believe that this company is poised for significant profitability over the next few years," estambar wrote. "The weak U.S. dollar doesn't hurt this firm as much as it does other consulting firms, as they generate a significant portion of their business outside the U.S."

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And back in 2006, CAPS All-Star "sandvig" had this to say about the business model:

"This looks like an interesting business to me. They provide business process outsourcing services," sandvig wrote. "It looks like their customer base includes a number of governmental entities. I would think those customers have a high inertia factor and would be rather stable."

As always, what we say here isn't meant to be taken as a formal recommendation; we want only to generate ideas that you might find worth further research. If you'd like to scour the bargain bin for yourself, read what our CAPS community thinks, or even chime in with your own opinions, click here to get in the game. Click here for more on how to put CAPS to work for you.

Oh, and CAPS is totally free -- an offer that even the deepest of value investors should never pass up.

This article was reported and written by Brian D. Pacampara for The Motley Fool. At the time of publication, he owned shares of Philippine Long Distance Telephone.

Editor's note: MSN CAPS is an investor intelligence service hosted by The Motley Fool. Companies are rated by players to outperform or underperform the market and are subsequently ranked from one star (the lowest) to five stars. Between Jan. 3, 2007, and May 12, 2008, five-star companies outperformed the SPDR Trust, an exchange-traded fund that tracks the S&P 500, by an average of 9 points, annualized, while one-star companies underperformed by an average of 15.6 points, annualized.

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