EMC Is a Steal

With that in mind, I'm on the lookout for companies that have shed plenty of value, in spite of continuing business success. If the company occupies an industry that will continue seeing demand even if the economy slows down, that's a plus. If the company has good exposure to emerging markets that continue to boom despite weakness in the U.S. and Europe, that's a double plus.

True, the stock nevertheless trades at 25 times revenues. Nevertheless, that metric conceals EMC's 80% stake in virtualization kingpin VMware. Netting out that holding, and removing VMware's contributions to EMC's financials, you'll find that EMC trades for only around seven times trailing free cash flow. That's a bargain-basement price for a company that's a proven leader in the storage industry -- one of the tech sector's hottest growth areas. Even if you're less optimistic on cloud computing and VMware's position in it, giving EMC credit for half of VMware's current value leaves EMC trading at 13 times cash flow.

I think that assessment is dead-on. Let the traders throw out EMC with the rest of research. As long-term investors focused on the company's leadership, and its valuable stake in VMware, we'll have the last laugh as EMC leverages its placement at the center of exploding data demand to deliver outsized results for years to come.

The coming weeks -- follow me on Twitter

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