Are Big-Cap Stocks Really Cheap?

I seem to be hearing the same refrain everywhere these days: In print, on TV and all over the Internet, pundits are screaming that big-cap stocks are cheap. Buy the blue chips, buy the dividend payers -- they are on sale right now. This has puzzled me as very few large-cap stocks are showing up in any of the screens I run on a regular basis. I can only assume that the pundits and gurus are looking at these stocks on a comparative or relative scale of value.

I do not really care how stocks look compared to five years ago or relative to analysts' forecasts. Cheap means a stock is trading below book value, has a single-digit PE ratio or a low price-to-free-cash-flow based on the current conditions. I decided this was worthy of further investigation and some back-of-the-envelope testing to see if the large-cap stocks were indeed cheap on an absolute basis....522 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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