It’s getting tough out there. On any given day, the market seems to drop right out of the gate, or instead start off strong only to slump later in the day. The net result: when the closing bell rings, stock of all stripes steadily march lower.

In times like these, capital preservation becomes a real concern. You want exposure to stocks when the next rally comes, but you also want to sleep at night.

Where to find stocks that can weather the storm? Well, we’ve run a list of large cap stocks that have slumped enough to see their P/E rates fall by a solid amount, even though they are still on the up leg of the earnings cycle.

As you’ll note in the table above, several of these stocks — especially the oil-and-gas plays, now offer juicy dividend yields. Royal Dutch Shell’s (NYSE: RDS) 5% dividend yield likely looked impressive in early May when its shares were touching a 52-week high. But the recent slump in its shares has pushed the yield up to an even more impressive 7.0% yield.

You know it’s tough out there when venerable Honda Motor (NYSE: HMC) is trading at just 10 times next year’s profits. This is a company that has experienced flawless sales execution, has a sterling reputation with consumers, and is well-prepared to handle increasingly stringent efficiency and emissions regulations. As we’ve also discussed, investors are running as fast as they can from tech stocks. Dell (Nasdaq: DELL) is hitting another fresh low this week, and now trades for just eight times projected 2011 profits. (That’s closer to a P/E ratio of six when the company’s hefty cash balance is excluded).

A Diversified Industrialist gets Marked Down

Most of the stocks on this list have their fortunes tied to one industry in particular. But Johnson Controls (NYSE: JCI) can boast of solid diversity among its customer base. JCI makes batteries, auto parts, heating/ventilation/AC (HVAC) systems and other products. It’s also increasingly seen as a “green play” because its HVAC division has secured a wide range of new contracts to retrofit existing buildings in order to become as energy efficient as possible. That’s now a $12 billion business for the company.

#-ad_banner-#It’s easy to see the appeal of this business: In general, the payback period for saving electricity is much quicker than for investing in alternative energy generation. Typically, the costs associated with reducing electricity usage are recovered within three to four years; whereas the payback period for a solar or wind plant is more typically seven to eight years.

JCI’s battery division also has a green sheen. Its new lithium ion batteries (developed in conjunction with partner Saft) should become a key supplier to the nascent electric and hybrid vehicle markets.

Of course, the company still makes money on legacy products. For example, JCI’s traditional car battery business controls roughly one-third of the market for after-market batteries. That’s a nice recurring business, as a typical car will go through at least three to four batteries in its lifetime. Johnson also makes a range of other auto interior products such as seats, door panels and electronics.

But the most important thing to know about Johnson Controls can’t be found among its customers or its products. Instead, it is the company’s cost structure, which has shed so much weight in recent years that the company is considered to be the leanest in its field. During the past two years, the company has closed 31 plants, pared its workforce by about -12% and can still make a profit, even if the economy slumps again.

Analysts think JCI can generate roughly $34 billion in sales this year, up a solid +19% from last year, but still about $4 billion below fiscal (September) 2008 levels. Once the economy gets back on its feet and sales move back toward the $40 billion mark, those cots cuts should yield record profits.

Action to Take –> Johnson Controls has typically traded for between seven and 20 times forward earnings. Right now, the forward multiple is much closer to the low end of that range. Assuming shares trade up to the mid-point of that range, or 13 times projected earnings, and if the fiscal 2011 EPS forecast of $2.42 is to be believed, then shares should rise back up to the upper $30s. That’s +50% above current levels. When sales claw back to the $40 billion mark, perhaps in fiscal 2012, per share profits should exceed $3. Not bad for a $26 stock.