TIME TO BUY?

The stock market is getting so ugly that it’s best to get out while you can or simply stay away, right?

But wait: Maybe the market is actually a beautiful, compelling sight right now.

Think about it. The axiom to “buy low and sell high” wasn’t born from whole cloth. As mundane as the saying is, it seems to apply to today’s market. Lots of big-name stocks--stocks of powerful companies with sound underlying businesses--are relatively cheap right now, just waiting to be bought by investors with cool heads and long-term views.

It’s normal for investors, amateur and pro, to get scared and to shun stocks as they watch the market’s dismal slide. Their fear overwhelms them, and they decide it’s better to wait until the market looks like it’s headed back up.

That’s even more true today, with so many more individuals trading stocks online. Many of them have taken a beating from investing too heavily in “dot-com” stocks that served up quick profits, then crashed.

But as has been proved time and again, a nasty drop in the market--and especially in high-quality stocks--could be exactly the wrong time to stay away.

Certainly, many of Wall Street’s professional money managers and institutional investors are buying stocks with a passion right now, given the huge volume we’re seeing. Remember, with every trade that knocks Cisco Systems or Lucent Technologies down another buck, there’s a buyer of those shares on the other side of the trade.

Are those buyers simply speculating--or do they know their history?

It’s more likely the latter.

Consider: When a series of economic and geopolitical woes around the globe sent the technology-laden Nasdaq composite index plummeting nearly 30% between July and October of 1998, many investors ran to the sidelines in fear. They should have been buying. Cisco’s stock more than doubled in price over the next 12 months, while shares of Texas Instruments soared 181% and Intel Corp.’s jumped 73%.

“Human nature never changes,” said Alan Skrainka, chief market strategist at brokerage Edward Jones & Co. in St. Louis. “The market, in the short run, has always been driven by emotions of fear and greed, and the same mistakes are repeated over and over again.”

There’s no question that people who bought tech stocks at their peak prices early this year “are now paying a price,” Skrainka said. But the current plunge is “giving the individual investor with a canny knack of being a contrarian an opportunity to buy great companies at bargain prices.”

That doesn’t mean one buys any beaten-down stock willy-nilly. Investors need to use the same diligence in evaluating a stock when its price is cheap as when it’s dear. And even if one thinks a company’s long-term prospects are good, the stock could still be dead money for quite a while.

Take Lucent. The stock--which already was in a nose-dive this year--plunged an additional $10.13 a share, to $21.25, on Wednesday after warning for the umpteenth time that its quarterly earnings won’t meet analysts’ forecasts.

The stock, down 75% from its 52-week high, now is priced at 21 times its expected per-share profit for its fiscal year ended Sept. 30. At its peak this year, the stock was priced at 84 times earnings.

Lucent obviously is having problems. But it’s no fly-by-night Internet company. It’s the world’s largest maker of telecommunications switching gear.

“It operates in one of the most attractive markets around. Communications equipment is the largest, fastest-growing market in the world,” said Tim Savageaux, an analyst at W.R. Hambrecht & Co. in San Francisco. “Lucent also has a giant installed base [of customers]. You have good reason to believe that, at some point, this could work itself out.”

There is, of course, a risk that Lucent could end up being the next Xerox Corp. Investors who expected troubled Xerox to rebound have instead watched its fortunes worsen--and its stock collapse.

Sometimes, recoveries take longer than anyone expects. “It took an unlucky investor 35 years to break even on an RCA investment if he bought it at its peak in 1929” before the market’s Great Crash, Skrainka noted.

With Lucent, it probably won’t be that long a wait. But it probably won’t be a quick fix, either.

“I would expect the company to recover, but the question is whether the stock is in a V-shaped bottom or a U-shaped bottom, and I suggest it’s in a pretty long U-shaped bottom,” Savageaux said.

But there are many other tech giants whose shares have been marked down dramatically, yet whose long-term prospects aren’t in question. The list includes several tech stars that, one can argue, were way overpriced this spring. Their valuations today, however, are far more reasonable for long-term investors, if not cheap.

They include Texas Instruments, which is now selling barely above its 52-week low; Cisco Systems, which has tumbled 30% since mid-March; and Microsoft Corp., a stock that has lost half its value just this year.

Motorola Inc.’s stock also has plunged by more than half this year. The big maker of wireless phones and other electronics said Wednesday that, despite a 66% surge in third-quarter operating profit, it expects its fourth-quarter and 2001 earnings to lag Wall Street forecasts as growth slows somewhat.

So Motorola’s stock dropped an additional $4.81 a share, to $21.44, on Wednesday. A grim situation? Well, consider that the stock now sells for 22 times Motorola’s anticipated per-share profit for this year.

True, earnings estimates are just that--estimates. A recession could mean earnings growth for many tech firms would slow much more than expected in 2001. Price-to-earnings ratios might not be as low as they seem. Even so, it’s worth remembering that, with many tech giants, we’re talking about premier global franchises.

Outside the tech group as well, there are stocks of blue-chip companies that many might consider screaming bargains. There’s Wal-Mart Stores, whose stock has skidded nearly 35% so far this year; and Chase Manhattan, down 21% this year to a 52-week low on Wednesday.

The market’s slide--especially the rout in technology--isn’t fun to watch and it could get worse before it gets better. But investors who have time on their side should be able to see the opportunities here.

“Sure it’s a new economy,” Skrainka said. “But the old rules of investing still apply.”