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Let’s throw traditional valuation metrics out the door for a minute and look at EV/Total Addressable Market Value. It suggests that some of the seemingly most expensive stocks are actually the cheapest – and vice/versa.

Tired of nit-picking over a point here or there in p/e, price/sales or EV/EBITDA?  Basing investment decisions on these metrics often obfuscate the real value proposition. We looked at EV/Total Addressable Market for a host of companies. It shows that some of the ‘most expensive’ stocks based on traditional metrics are actually among the cheapest on this methodology.

In our analysis, we not only look at the market size each company is targeting, but also apply two discount factors; 1) the extent to which the company has the operating infrastructure in place to garner increased share, and 2) whether management is capable of achieving this growth.