The stock market is full of irrational exuberance and wacky prices, both high and low. One of the keys for Foolish investors is to be able to decipher which stocks are the best values from the stocks that are way overvalued.

Any stock can be analyzed and painted as over- or undervalued when standing on its own, but sometimes a comparison analysis tells a better story. When a company is growing faster and more profitably than a competitor or industry rival, it should give us pause. Below are three such comparative valuations that made me take a step back and ask some questions. I've tried to find stocks that have similar prices to make the comparison a little easier.

The battle of stock market darlings
There is no debate that Apple (Nasdaq: AAPL) and Netflix (Nasdaq: NFLX) have both treated investors very well over the last few years. Both Motley Fool Stock Advisor picks have enriched investors, but when you compare their valuations, I'm left wondering how Apple isn't even higher.

Company

Stock Price

Earnings per share (TTM)

1-Year Revenue growth rate (TTM)

Apple $347.60 $21.31 71.1%
Netflix $236.41 $3.60 34.9%

Source: Capital IQ, a division of Standard and Poor's. TTM = trailing 12 months.

Not only does Apple make six times more in profit per share, it also grew revenue twice as fast last year. I will also point out that Netflix has only about $45 per share in revenue (based on average weighted shares outstanding), so unless it expects to reach a 50% net margin -- it's at a bit less than 8% right now -- Netflix won't be catching up to Apple.

The exuberance around Netflix is at an all-time high, but has it become irrational at this point?

Gambling on Macau vs. Las Vegas
There are two sure things we know about the gaming market as investors: Asia is the future, and Las Vegas is the past. Sin City had a nice run until the recession, but with states trying to grab gaming tax revenue, gambling dollars are being spread around, and the city doesn't have the draw it once did.

Macau, on the other hand, is the only place in China where gambling is legal, and gaming companies are raking in cash there. MGM Resorts (NYSE: MGM) gets a piece of that action, but it owns a 50% stake in a single casino, whereas Melco Crown (Nasdaq: MPEL) owns two casinos itself. That means revenue growth for Melco Crown leaves MGM in the dust.

Company

Stock Price

Earnings per share (TTM)

Revenue growth rate (TTM)

Melco Crown $10.63 ($0.02) 98.2%
MGM Resorts $14.45 ($3.10) 2.2%

Source: Capital IQ, a division of Standard and Poor's. TTM = trailing 12 months.

Gaming earnings are driven by revenue growth as casinos pay off massive investments to build resorts, so don't think that negative earnings per share means negative cash flow. But as you can see, Asia is the place where most of that growth has taken place. As a result, Melco Crown is almost back to breaking even, while Las Vegas Sands (NYSE: LVS) has turned positive cash flow into positive earnings. MGM has a ways to go before turning earnings-positive and has to rely mostly on Las Vegas to get there.

Chipping away
Intel is still one of the most puzzling valuations on the market to me. Despite its size, Intel (Nasdaq: INTC) is still growing revenue faster than the much smaller Advanced Micro Devices (NYSE: AMD) and has a treasure trove of cash to top it off. With P/E ratios that are very similar, that tells me the market has something against Intel.

Company

Stock Price

Earnings per share (TTM)

Revenue growth rate (TTM)

Intel $22.76 $2.20 20.6%
AMD $8.94 $1.01 12.6%

Source: Capital IQ, a division of Standard and Poor's. TTM = trailing 12 months.

The much larger Intel may not have quite the upside that AMD does, but Intel also has $12 billion in cash and short-term investments, so downside risk is lower as well.

Valuation matters
What you pay for a stock matters, and I've shown three examples of stocks I think are cheap relative to competitors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.