Yes, Valuations Can Be Faulty

We've got to talk about two companies that tell you stocks are, at times, wildly divergent from the fundamentals: Best Buy (BBY) and Pioneer Natural Resources (PXD). Here are two companies that were simply priced incorrectly coming into this year. It's worth examining how that can be, because so many people, particularly academics, believe stocks are efficient judges of the businesses that underlie them.

Let's start with Best Buy. Here's a company that came in to the year at $11 as many worried that the biggest bricks-and-mortar purveyor of electronics could go under. You know the rap: Best Buy was simply the showroom for Amazon (AMZN), and Best Buy was going to go the way of the book chains and the other hardware companies, like Circuit City, and just disappear....697 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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