While most investors are fretting the markets recent contraction, you can be quite confident that "my pal Warren" has a smile on his face, as does Peter Lynch, Ken Heebner, Bill Miller, Bruce Berkowitz, and any number of fellow value investors that know now may be a time of opportunity. That is because they have the experience and understanding to pounce when they have a chance to buy things cheap.

This is the fourth installment of my series to discover just that: cheap stocks. If you would like to get on board from the beginning then review the initial post which screened for stocks with lower than market average P/E ratios, see Serious Money: Market Looks Cheap to Me -- 35 Stocks. In the second installment, I looked at yield and PEG ratios: Serious Money: Still Cheap Market -- 35 Stocks + Yields & Growth. Then I moved on to the the P/S and P/CF metrics in Serious Money: Cheapest Stocks Yet -- From 35 to 26, cutting nine stocks.

In Part 6, we're going back for seconds: our second alcohol company, energy company and medical company. The reasons should be apparent, but in case they aren't: I think all three are essential -- maybe alcohol more than the other two. Ironically alcohol can be substituted for the other two, and often has been.

All three companies are well-established and U.S. based, lead their respective industries, have top flight management in the judgment of their peers and the investment community, pay dividends and have a long history of high return-on-equity.

There are better companies and better stocks to invest in these days than Microsoft (NASDAQ: MSFT), but it would be silly of me to leave this company totally out of the picture just because it is not in my top ten.

The market is down a few percentage points as I write and MSFT is down in sync with the market. Many investment gurus have stated that they think a 10% correction is in order after the huge run-up since March 9, 2009. I am not so sure there will be a 10% correction or any particular correction just because the market was on a hot streak.

Reading through TheStreet.com's ratings this weekend, I came across something interesting:

Nutritional and personal care products developer USANA Health Sciences (NASDAQ: USNA) has been upgraded to a buy from a hold. Its revenue increased by 16.9% in the third quarter compared with the same period last year. Earnings improved to 70 cents a share from 55 cents per share over the same timeframe.

The company's return on equity improved to 184.53% in the third quarter compared with 78.97%, a signal of significant strength within the corporation. This return on equity greatly exceeds that of both the industry average and the S&P 500. USANA Health had been rated a hold since August 2007.

All of that is true and, as investors, we all know that a company that can earn high returns on equity is a wonderful thing indeed. If you don't believe me, take a look at the writings of Peter Lynch, Warren Buffett, Bill Miller, and just about any other great investor.

But at some point, a high return on equity becomes a red flag for fraud and/or an unsustainable business model. Can a company's management/business model be so amazing that the company can earn returns many times greater than industry peers or that market as a whole -- without any particularly important patents or competitive advantages to speak of? Does TheStreet.com really think that a ROE of 184.53% is sustainable? Are Dave Wentz and Gil Fuller (Usana's President and CFO, respectively) really more than eight times as good at deploying capital as Warren Buffett?

I somehow doubt it.

Visit AOL Money & Finance for more earnings coverage

EBay has been stirring things up on blog sites around the world with its recent fee increases and business plan alterations. At this point there is no question it has been insensitive to a large group of angry and frustrated sellers. The unhappy store owners seem to want nothing more than to be heard. So heard they shall be...

I was impressed with the quantity and quality of the comments two days ago when I posted "eBay's message to sellers: Grow or die!" the storm of comments did not die down when I posted a follow-up yesterday: "eBay was revolutionary - now "peasants" are revolting!" If you want the details you can refer back to these posts. Now it's time to move forward.

While sellers have plenty of reasons to be frustrated, they can be sure they are being heard by eBay. When I last checked there were over 600-700 links to my posts. EBay management is getting an earful (and eyeful) given this, and so many other blog sites and editorial pages and direct communications to the company.

Unfortunately, no one should expect a response from eBay. They should get one; they deserve one; but they won't. EBay does not want to change its plans and it does not want to stoke the fire by giving objectors a platform. I, on the other hand, don't mind at all. I think it is important. This Marketwatch story gives a little more insight into eBay's thinking.

Get your motors running! On Tuesday, August 15, Harley Davidson (HDI) will change its ticker symbol to "HOG." HOG is the acronym for the Harley Owners Group, but this was adopted long after the term was a nickname for the bikes world wide. No doubt the change in ticker symbol will serve as a form of brand extension, which Harley excels at better than most.

I can think of many companies like Coca-Cola, Pepsi, Starbucks, Disney, FedEx, Porsche, McDonald's, Yahoo, eBay, Google, J&J, GE, and on and on that have strong brands that have been extended to every kind of merchandise and promotion imaginable. However, very few end up tattooed on someone's body. J&J, don't think so. Yahoo not yet. Google, maybe it's coming. For Harley Davidson it is common. The only thing I can think of that comes close is Snoopy and Micky Mouse, but they may be fading and HDI, I mean HOG, is still growing and strengthening its brand like few others. Could they be influenced by GOOG's symbol, whose brand is growing by leaps and bounds -- that might be a stretch.

So this week when the HOG's invade the market they will be riding high, and that includes their stock price, which is approaching an all-time high. Even more incredible, the company's fundamentals are looking good and do not appear to be topping out!

I recently received a comment to an article I wrote a while back questioning my favorable opinion of Home Depot (HD) where I stated that despite its poor performance this year I still felt it was a good core holding; thus I feel a "public airing" is in order.

The following was the comment I received on Thursday, June 29:
    Why would you list The Home Depot as a "solid company" and give people the impression it's a stock to buy or hold at this time?  Investors have had trouble with management, the board of directors, and the the direction the Home Depot is going.
     Price of HD stock has been declining since the first of the year. It hasn't been doing well over the last five years. This is a stock a person has to gamble on. Flip a coin, cut a deck of cards, roll the dice, then decide if you want to invest. There is no "solid" evidence that this is a "must have in my
portfolio" stock.
     Todays Home Depot is not the money maker of 5 or 10 or 15 years ago because it's not the same company.