3 Troubling Signs Point to 1 Big Opportunity: Wal-Mart Stores, Inc. (WMT), Darden Restaurants, Inc. (DRI)

Also, Wal-Mart Stores, Inc. (NYSE:WMT)‘s most recent earnings announcement acknowledged that sales have dropped precipitously in February. In anticipation of another trade-down trend, Wal-Mart is lining store shelves with less expensive goods. The retailing giant is trying to prevent consumers from turning to deep-discount retailers like Dollar Tree, Inc. (NASDAQ:DLTR), as customers did in the wake of the financial downturn.

On the bright side
But great investors thrive in times like this. Warren Buffett is “greedy while others are fearful.” And Sir John Templeton advised “buying on pessimism.” The troubling signs we’re seeing today embody dread. But when contrarian investors sniff despair, they know it’s time to buy. Need further proof? Since the March 2009 doldrums, the Dow Jones Industrial Average has nearly doubled.

And consumer-goods companies — like those I’ve mentioned here — boast an even bigger advantage in tough economic times: People still need to brush their teeth and feed their bellies. Folks can delay buying a car or taking a vacation for a couple of years. The same can’t be said for avoiding that heaping pile of dirty clothes in your hamper.

Even better, many of these companies trade at relatively enticing valuations today. Both Wal-Mart Stores, Inc. (NYSE:WMT) and Darden Restaurants enjoy forward price-to-earnings ratios of 12. Dollar Tree possesses a forward P/E of 15, and both Kraft and P&G trade at 17. Meanwhile, the P/E ratio of the S&P 500 currently trades close to 17. And, with the exception of Dollar Tree (which does not pay its shareholders a dividend), these companies pay exceptional dividends.

Foolish bottom line
Long-term investors know that dips and bumps are part of the long road to portfolio riches. So don’t let temporary events change your perspective and turn you into a shortsighted investor. Truth be told, the most troubling events create the best buying opportunities for investors.

The article 3 Troubling Signs Point to 1 Big Opportunity originally appeared on Fool.com and is written by Nicole Seghetti.

Fool contributor Nicole Seghetti owns shares of Wal-Mart and Procter & Gamble. Follow her on Twitter: @NicoleSeghetti. The Motley Fool recommends Procter & Gamble and owns shares of Darden Restaurants.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.