America's Next Top Value Stock

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If you think finding true value in the stock market is a simple process then I've got a bridge to sell you.

The truth is that although markets aren't as efficient as some university professors may want you to believe, they generally do a pretty good job of pricing stocks. So while there are good deals out there, you're going to have to break a bit of a mental sweat if you want to make sure that you're putting a true value stock in your portfolio.

Fortunately for us, in the search for stock market values, we have the 110,000-plus members of The Motley Fool's CAPS community voting on which stocks are beauties and which are just posers. To gather some ideas I've dug up a handful of companies valued at less than twice their book value -- a measure typically used by value investors.

Company	Book Value Multiple	1-Year Stock Performance	CAPS Rating
Pulte Homes (NYSE: PHM)	0.7	(57%)	*
Centex (NYSE: CTX)	0.8	(67%)	*
Super Micro Computer (Nasdaq: SMCI)	1.7	(29%)	****
Sony (NYSE: SNE)	1.5	(12%)	**
Chunghwa Telecom (NYSE: CHT)	1.8	27%	*****

Source: Capital IQ, a division of Standard & Poor's; Yahoo! Finance; and CAPS as of June 13.

As you can see, though these stocks all carry value-like multiples, the CAPS community obviously doesn't think that all are worthy of your investment dollars.

Walking the stock runway
Though they carry the lowest multiples of the group, it's clear that CAPS players don't think homebuilders Pulte Homes and Centex are ready to turn around quite yet. And players aren't any more sanguine about KB Home (NYSE: KBH) or Lennar (NYSE: LEN), either.

Why so much pessimism? As fellow Fool David Lee Smith recently pointed out, builders are still building way too fast, given the amount of sitting inventory on the market. That means that they're stuck between a rock and a hard place -- either cut back on building, which hurts, or keep building despite the inventory abundance, which will also hurt.

In short, despite the apparent cheapness of the homebuilders, it's still probably best to steer clear.

Down to the final two
In a head-to-head matchup, small-cap Super Micro -- which sells high-performance computer servers -- puts up a good fight, but its 109 fans on CAPS weren't enough for it to top Income Investor pick Chunghwa Telecom.

So what makes Chunghwa so beautiful in investors' eyes? The 308 CAPS players that have rated it an outperformer seem to agree that the Taiwanese market -- where Chunghwa is the largest provider of telecom services like fixed-line telephone, cellular communications, and Internet services -- is an attractive one to have a lock on. Investors also appreciate the stock's 4.4% dividend yield.

NetscribeTelecom, a top performing player in CAPS, is bullish on Chunghwa, and noted that the diversity of the company's businesses is helping it maintain growth:

Taiwan, with one of the highest fixed-line penetration rates in Asia, is now experiencing rapid adoption of wireless communications and Internet services, including broadband access services. Consequently, mounting demand for wireless and broadband in Taiwan has offset declining fixed-line business, which has helped Chunghwa Telecom maintain growth over the past few years.

Make your vote count!
Do you agree that America's next top value stock may not be an American company? Click over to CAPS and let the rest of the community know what you think. And while you're there, you can log your vote for the other stocks that you think should be in the running.

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