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.

A new year is upon us and like the beginnings of any year, and even more so, a decade, the predictions are flying fast and furious.

The start of 2010 is bringing out every analyst, talking head, business journalist, periodical and newsletter propagator, sportscaster, palm reader, taro card interpreter, astrologist, medium and madam making predictions to garner attention, entertain and even profit. Apologies to anyone I left out.

During my tenure at BloggingStocks I have expressed my opinion often about the contribution that dividends make to your overall return. Most shrewd investors, and especially "my pal Warren," know this and understand why I re-emphasize the point when I make my annual selections.

By now I hope you have had a chance to peruse my picks for 2010. If not the links below will give you another opportunity.

For the first time my annual picks will include a stock option. I have written numerous blogs this year about something called "naked puts" -- that is a sell to open put position -- committing me to buy a certain number of shares by a certain date if the closing price is less than the strike price.

In this case I have selected the E*TRADE (ETFC) January 2011, $2.50 puts last traded on December 28, 2009 at $0.97 for a 39% return. If it expires, as I am betting it will, by the third Friday of that month I have no further obligation.

This type of option transaction is not available to most investors. It is marginable, but you pay no interest.

The Olympics are coming! The Olympics are coming to Brasil Telecom (BTM) -- well actually to Rio de Janeiro, where BTM is headquartered, in the summer of 2016.

This company came to my attention while screening mid-caps for yield, currently a healthy 7.81% (not distributed quarterly) and a very low price-to-sales ratio of 0.52. This first glance was followed by more scrutiny with an interest in Brazilian companies for potential growth and diversification.

If you are in the right place at the right time, then you have the most opportunity. That pretty much explains why I recently bought shares of the Raytheon Company (RTN) -- and why it is one of my picks for 2010.

Raytheon (whose name means "light of the gods") is a top 10 prime contractor to the Pentagon. The list of critical systems it makes include reconnaissance, targeting, and navigation systems. It is a leader in missile defense systems, which include the Patriot, Sidewinder, and Tomahawk systems. Raytheon also makes radios, air traffic control systems and radars, satellite communications systems and provides commercial electronics products and services as well.

To arrive at this years ten picks I scoured business journals and editorials, online and off. I also ran through a series of stock screens repeatedly over the last few months filtering for five primary value metrics identifying stocks worthy of further consideration.

The 5 data points were price-to-sales (P/S), price-to-book (P/B), price-to-cash flow (P/CF), dividend yield and return-on-equity (ROE). I did look at other things but these were the subject of my initial focus.

This post is part of a special report, Top Picks for 2010, the 27th annual survey in which TheStockAdvisors.com asks the nation's leading advisors for their single favorite stock for the new year. See all 80 stocks listed here.

"Moviegoers represent a captive audience that can't change the channel or block a pop-up ad," observes value investor Nathan Slaughter.

In his Half-Priced Stocks, he suggests, "We expect more companies than ever before to spend ad dollars on theater ads, leading to a banner year for National CineMedia (NCMI)."

"The health care business is immune to an ill economy, as people still need vaccinations, sutures and blood screens regardless of business cycles," notes value investor Nathan Slaughter.

In his Half-Priced Stocks, he suggests, "When it comes to medical waste disposal, demand is constant and barriers to entry are high." To play this specialty sector, he looks to Stericycle (SRCL).

"Stericycle is the dominant player in this field. The firm safely empties all those bins, and also removes discarded waste from research facilities, laboratories, hospitals, surgical centers, pharmacies, veterinary clinics and even dentists' offices.

"Vacationers and professionals finally appear to be hitting the road, and many are relying on Expedia (NASDAQ: EXPE) to handle the details," says Nathan Slaughter in Half-Priced Stocks.

The value investor explains, "Expedia's travel sites processed 15.3 million transactions during the second quarter, 18% above the same period last year. Howevver, the gross dollar amount of those bookings dipped slightly to $5.6 billion/

"Whenever you have more trips bringing in less money, it's a pretty good indication that prices are way down.

"We're looking for profits in a sector of the economy that almost everyone has written off -- newspapers," says Glenn Rogers.

In Internet Wealth Builder, he explains, "I have been involved in the newspaper industry for good portion of my career; so it has been with great dismay that I've watched the industry crumble over the last few years." For contrary investors, he looks to New York Times (NYSE: NYT) and Gannett (NYSE: GCI).

"The Internet in general has siphoned off millions of dollars of advertising that used to belong to the newspaper industry.

The Cabot Benjamin Graham Value Letter focuses on stocks that meet the strict value criteria of the legendary investor. Here, J. Royden Ward looks to Teva Pharmaceutical (NASDAQ: TEVA), noting, "Teva is based in Israel and develops, makes and sells generic and proprietary-branded (store brand) drugs."

The advisor explains, "The company is one of the largest generic drug-producing companies in the world and, in addition, sells active ingredients to other pharmaceutical companies.

"Teva's aggressive acquisition and product development programs are driving strong sales growth. The company recently purchased U.S.-based Barr Pharmaceuticals for $7.5 billion. Barr will increase Teva's generic drug sales significantly in the U.S. and parts of Europe.

"Like a sailboat waiting for a gust of wind, Carnival (NYSE: CCL) hasn't had any means of propulsion lately; in fact, they've been anchored by swine flu and sluggish travel demand," notes value investor Nathan Slaughter.

Nevertheless, in his Half-Priced Stocks, he remains optimisticbullish, noting "Eventually these storm clouds will clear." Here's his bullish long-term outlook for the cruise ship opertor.

"Fortunately, these negatives are macro-level factors, not company-specific issues. All things considered, the world's largest cruise operator is performing admirably in this tepid environment.

Some of you may have heard this before if you have been in the stock market for a long time: The cheapest place to find oil is on the floor of the New York Stock exchange!

With the price of oil moving up faster than the price of oil stocks, and the high cost of exploration and developing new sources, I have been surprised that there have not been any mergers or acquisitions by the major oil companies. I would think now would be a good time to add to their proven reserves with far less risk than looking for new sources.

It also seems to me that the risks associated with exploration and developing new product would be easier to absorb by larger entities.

This has been a good year for many stock pickers and my Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more is beating the market to date. The formal review will be published after the second quarter.

Among the stocks that have been doing surprisingly poorly, of the nine, is EZCORP (NASDAQ: EZPW) that owns and operates a chain of pawn shops and cash advance outlets.

Today it is trading significantly lower, from yesterday's close of $12.89, off about 14.5%, bouncing around the $11.00 mark. The stock is down on company news that earnings for the next two quarters and the full year would be down a few cents per share below analysts estimates and earlier company forecasts.