Sonic Could Be a Boom

Last night, I had a chance to catch up with a good friend of ours on the left coast. After we discussed the truly important issues, such as whether it will be the Angels or Yankees for the American League pennant this year and the merits of Kentucky Wildcats over the Syracuse Orangemen in the NCAA, we turned to the investment business. He asked, as he always does, if I was still buying my collections of cigar butts. Of course, I'm still buying stocks below tangible book value, trading below net current assets and those with very low EV/EBITDA ratios. My friend is more of a great company investor and likes to look for those with high returns on capital invested in the business.

There's nothing wrong with that approach. I just don't use it most of the time. In a true meltdown like 2008, I will buy stocks such as like Disney (DIS) and Intel (INTC), but that has more to do with valuation than my love of big companies. I bought Disney because it traded at roughly a 40% of my asset appraisal, not because it is one of the great companies of our time. For me, it's all about valuation....528 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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