I hate throwing stuff away.

It became a bit of a problem after I got married. My wife just didn't care for the gaming systems, computers, and musical instruments that sat dormant as relics around the house. She couldn't understand why I would let something collect cobwebs and take up space.

We eventually came up with a compromise. If she came across an electronic gadget that I hadn't used in ages, she would start humming the Sanford and Son theme song. That was it. If I didn't dust it off and use the item in question, my wife would either donate it to charity, give it to someone who would use it, or just toss it away.

Sadly, that's how I lost my 3DO and my Amiga computer. She's eyeing my Moog Rogue synthesizer these days. I'd better start jamming on that old analog keyboard before it gets heaved into a dumpster.

Fishing through Fred Sanford's junkyard
I have never been able to convince my wife that there is value in neglected wares. Some investors feel the same way. They won't touch a stock that has collected dust. If a model looks dated, they'll just grunt and turn the other way.

That's a pity, because history is loaded with companies that have bounced back. Discarded stocks can simply be biding their time. I decided to do my part and screen for the unloved.

I filtered the stock universe to show only companies that were trading below book value. Also known as shareholder equity, it's an imperfect gauge, because there is more to a balance sheet than meets the eye. Just because a company is trading for less than the value of its assets after you have subtracted all the liabilities, that doesn't mean the company is worth less than worthless. The stated sums can differ from their actual worth. However, it's not a bad place to start.

Then I narrowed my list to companies trading at forward profit estimates below 16. Again, that's another imperfect gauge, but I figured that the two screens in concert would help whittle down my junkyard to a few choice cuts. It did. I was down to just 66 companies. Here are four that caught my eye.

Price/Book Forward P/E
PC Connection (NASDAQ:PCCC) 0.84 15.6
Perry Ellis (NASDAQ:PERY) 0.98 8.9
Vodafone (NYSE:VOD) 0.68 10.8
REX Stores (NYSE:RSC) 0.74 8.5

PC Connection, a distributor of IT products, had a disappointing showing last year. Sales rose 7%, but earnings per share dipped to $0.18 from $0.33 in 2004. However, an improving economy can work wonders on corporate suppliers like PC Connection and larger competitor CDW (NASDAQ:CDWC). That finds PC Connection trading at 15.6 times this year's projection and just 10 times next year's bottom-line target.

Perry Ellis is a men's sportswear specialist that also services private labels at leading department stores. Apparel may send a shiver down your cashmere-covered spine, but Perry Ellis is growing and trading at a single-digit earnings multiple.

Vodafone may appear to be in a state of disarray. Between management flaps, impairment charges, and now buyout rumors, there are plenty of things going on at the world's largest mobile phone service provider. When you're stagnant, flux can be a good thing. The company hadn't turned a profit since 1999, but its healthy cash flow production won over our resident value stock guru Philip Durell last summer. He went on to recommend the shares to Inside Value subscribers.

Then we have REX. We may all love Best Buy (NYSE:BBY), but what about rural pockets of the country, where the consumer-electronics superstore would stand out like a sore thumb? That's where REX comes in. It has 224 stores, located mostly in smaller cities. Yes, it's running about a dozen fewer stores than it was a year ago. Yes, earnings are expected to dip to $1.80 per share here in its new fiscal year. But that still prices the company at a bargain P/E multiple, and the attractive price-to-book value may make it buyout bait for Best Buy or Circuit City (NYSE:CC) if they want to penetrate deeper into the heartland.

I'm coming to you cheaply, Elizabeth
Don't fear the junkyard. Granted, one investor's trash may be another investor's trash, too, but don't let that sink your spirits. Keep digging. Turnaround stories are everywhere. Forgotten companies trading at unheard-of prices may offer market-thumping potential with some downside protection to boot.

On a grander scale, that's exactly what Philip does for Inside Value readers. He digs deeper than anyone else I know to make sure he is singling out fundamentally sound companies that have either fallen out of favor or just happen to be trading at a disgracefully cheap price. He's done well: His average recommendation has appreciated by 12.9% while the riskier market as a whole has inched up an average of just 8.4% in that time. You don't have to be Fred, Demond, or even Aunt Esther to appreciate the value of Sanford's yard. Running with Philip on his salvage missions can be cheap, too -- as in free -- if you want to check out the newsletter service for the next 30 days with a trial subscription.

Don't be afraid to get some dirt beneath your nails. Fight for the value lodged beneath the rubbish. I can hear my wife humming. Don't let her trash your relics, too.

Best Buy is a Motley Fool Stock Advisor recommendation.

Longtime Fool contributor Rick Munarriz always felt sorry for the Demond Sanford character in the show but admired Redd Foxx as a comedic genius. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.