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0.4
107%
Data from Capital IQ, a division of Standard & Poor's.
Those are some impressive, albeit inconsistent, gains. Of course, you could have made even more money investing in a number of other value stocks, though they may have appeared somewhat pricier based on a cursory look at their multiples. Consider these monster performers:
Year
Company
Price-to-Sales
Price-to-Earnings
Price-to-Book
Return Through 2008
1999
Frontier Oil (NYSE: FTO)
0.6
7.4
2.0
1,025%
2000
Cummins (NYSE: CMI)
0.5
1.5
11.4
172%
2001
Terex (NYSE: TEX)
0.6
2.5
1.0
114%
2002
Middleby (NYSE: MIDD)
0.4
13.1
1.2
949%
2003
GameStop (NYSE: GME)
0.3
14.3
1.1
342%
Data from Yahoo! Finance and Capital IQ, a division of Standard & Poor's.
While this is by no means a conclusive survey, we can draw a few important conclusions:
Point taken
While I've shown you which name the multiples tell us is the market's cheapest stock, I should caution that it's not one I would recommend buying. As investors, we should always keep in mind that valuation is a forward-looking exercise that requires anticipating how the company will perform under future conditions. At Inside Value, The Motley Fool's value investing service, we also consider a company's competitive position, market opportunities, relationships with customers and suppliers, and the quality of its management when building our models.
Our Inside Value team has identified several bargain stocks that also have the competitive positioning to thrive in this market. You can click here to read about their favorite stocks free for the next 30 days. There's no obligation to subscribe.
This article was originally published on May 22, 2009. It has been updated.
Ilan Moscovitz owns shares of Google, a Motley Fool Rule Breakers selection. GameStop is a Stock Advisor pick. Middleby is a Motley Fool Hidden Gems selection. The Fool owns shares of Middleby and Terex and has a disclosure policy that makes us all proud.
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