In "6 Companies You Can Buy Today," I used an all-encompassing valuation metric to find companies that looked cheap.

The metric is simple, but seldom used: enterprise value over unlevered free cash flow. To review these terms:

  • Enterprise value: Market capitalization (share price times shares outstanding) plus total debt, preferred shares and minority interests, minus cash.
  • Unlevered cash flow: Free cash flow plus interest paid on outstanding debt.

Combine the two, and you get a broad valuation look inclusive of everyone with a financial stake in the company -- both bondholders and stockholders.

I like using this metric because it forces you to think like a real business owner. If you were to own an entire company, you'd pay attention to every penny of capital used to fund that company's balance sheet. You'd look at the big picture.

Yet it's too easy, and too common, for investors to hone in solely on a company's equity value without giving much thought to the role debt plays. Using this simple metric incorporates both equity and debt, and answers the question, What is this company, the entire company, really worth?

Readers responded well to the first article, so I figured, heck, let's keep this party going and find six more companies that look cheap:

Company

Enterprise Value / TTM Unlevered Free Cash Flow

5-Year Average

Forward P/E Ratio

Northrop Grumman (NYSE:NOC)

6.5

15.1

9.2

Altria (NYSE:MO)

7.9

12.3

9.9

Xerox (NYSE:XRX)

8.0

12.5

9.3

Apollo Group (NASDAQ:APOL)

10.1

26.9

9.6

VF Corp. (NYSE:VFC)

11.4

19.6

12.1

Coach (NYSE:COH)

11.4

23.3

15.4

Sources: Capital IQ, a division of Standard a Poor's, Yahoo! Finance.
TTM = Trailing twelve months.

Now, the standard caveats here: Reported cash flow can look healthier than it should if a company pares back capital spending or draws down on net working capital. I cherry-picked this table to weed out companies that largely juiced cash flow either of these ways -- Sears Holdings (NASDAQ:SHLD) was one offender. Even so, it's always difficult to accurately compare historical cash flow since capital spending naturally see-saws over business cycles. This was especially magnified over the past year, with businesses hesitant to invest.

Still, a few of these companies not only look cheap, but there are plenty of other reasons to love 'em.

Take VF Corp., an apparel conglomerate focused primarily on jeans. Name brand apparel is a notoriously bad business, but VF has a unique business model. It uses the stable profits from established cash cow brands like Wrangler Jeans and Lee Jeans to plow into high-growth brands like The North Face. The result is not only fairly stable growth, but also a dividend that can be measured in decades rather than years.

Or how about Apollo Group, operator of the for-profit mega college University of Phoenix. Not only does massive unemployment spark the need for millions to return to school and gain marketable job skills, but over 80% of Apollo's revenue is associated with Title IV federally backed scholarship aid. So the largest contributor to the bottom line is a deep-pocketed and benevolent customer.

Hate the company all you'd like, but cigarette king Altria Group currently has a dividend yield approaching 7%, which is about as high as you'll find from any large-cap company. Or any sized company at all, for that matter. Altria's story hasn't changed in decades: The cigarette business spits off a ridiculous amount of cash, but investors keep their distance because of either moral loathing (can't blame you) or litigation fears. That lack of love creates a stock with a consistently high dividend yield for those of us morally bankrupt yet return-hungry enough to participate. Altria just raised its dividend last fall, showing it still isn't afraid to reward its shareholders.

Markets have exploded since last March, which makes it easy to assume that we've fallen into another cesspool of bubble madness. In some ways, maybe we have. Good, high-quality bargains, however, are still out there. You just have to look hard enough.

Thoughts? Share 'em in the comment section below.

Fool contributor Morgan Housel owns shares of Altria. Apollo Group is a Motley Fool Inside Value pick. Coach is a Motley Fool Stock Advisor recommendation. V.F. is a Motley Fool Income Investor selection. The Fool has a disclosure policy.