Motorola (NYSE:MOT)
Trading at $15.70 as of 2/9/05

This article is part of our annual Stocks Fools Love Valentine's Day special.

Let me preface this column by saying that I'm a confirmed Nokia (NYSE:NOK) customer. I love the Finnish firm's cell phones. Couldn't care less whether they make 'em in the form of "candy bars" or "clamshells" -- or "ostrich legs" or "xylophones" for that matter. The telecom giant got big by making phones that are at once stylish to look at and intuitive to use. The first cell phone I bought was a Nokia, and -- never a "first adopter" or technophile -- I took to it like the proverbial fish to water.

In contrast, the first cell phone I tried to use was a Motorola (NYSE:MOT). I can't even tell you what kind. I've repressed the memory. I can't tell you what model it was, or why I didn't like using it. It just didn't click. Whatever magical knowledge of the consumer Nokia had that made its phones so easy and natural to use, Motorola lacked.

Which is an undeniably strange way to lead into why I now prefer Motorola over Nokia as an investment (speaking of which, I currently own both stocks). But like the man said, facts is facts. And speaking of facts:

According to the most recent figures available on Yahoo! and MSN (the site I turn to when Yahoo!'s number-crunching engine gets indigestion from a foreign firm's SEC filings), Nokia currently sports an enterprise value of $54.4 billion. It generates annual free cash flow of $4.0 billion, yielding an enterprise value-to-free cash flow ratio of 13.6. For a company that analysts expect to increase earnings next year by 21%, that's cheap. And with those same analysts expecting earnings to rise by an average of 10% per annum over the next five years, while it's not as cheap, it's still a pretty decent price. Nokia, after all, has been the market leader in cell phones for as long as I've been investing. And to own the leader, you've got to pay the piper.

Motorola, on the other hand, is getting no respect -- even as its latest phone offering, the "Razr," is skyrocketing in popularity. From a valuation perspective, the company's even cheaper than Nokia. With its enterprise value-to-free cash flow of just 10.3, the company currently falls just shy of passing the 7 Steps test I use to find Motley Fool Hidden Gems candidates. Turning to analyst estimates, Motorola looks to be less of a bargain than Nokia in the short term (it's projected to boost earnings by just 12% next year) but a much better deal than Nokia over the long term (where analysts see it, like Nokia, growing earnings by 10% on average).

What's more, Motorola has got something that Nokia doesn't: recent sales and profits growth that's been ignored by a stubbornly pessimistic Wall Street. Over the past three quarters, Motorola has beaten its fiscal 2003 numbers by posting double-digit profit growth once -- and triple-digit gains twice. And how has Wall Street reacted to that? By leaving its share price essentially unchanged over the past nine months. When a stock's that unloved and underappreciated, you just know that a value investor like me is going to pick up the treasure, take it home, give it a polish, and put it on a shelf until somebody else is willing to pay what it's worth.

Fool contributor Rich Smith owns shares of both Nokia and Motorola. The Motley Fool has a disclosure policy .