I respect Jim O'Shaughnessy's work. I met him at a book signing once. You realize that Jim is a value-oriented guy. He looks at stocks that are trading at historical low multiples (mostly Price/Sales), and holds them forever.
The above is a good strategy, but IMO, it must be used with more mature companies. For the most part, Jim does not take into account the company itself and what market it exists in. Jim looks at the numbers, nothing more. If you ever seen him on CNBC during one of those call-in Q&A sessions analysts do, whatever the question is, Jim goes back to the numbers. Don't get me wrong, I respect his analysis and know where he is coming from (I'm a statistician myself – numbers can't lie to me <g>), but one needs to look at the big picture regarding any stock.
Looking at Johnson and Johnson and Philip Morris this way is helpful, looking at hyper-growth companies, especially tech stocks IMO, cannot be done successfully. Run a screen and look at tech stocks that can be considered value plays. More than likely most of them are falling behind the tech curve - hence the "value". This is something you can't equate on a screen.
In sum, if you see a company with phenomenal growth, on average you're going to pay a likewise multiple for it.
Just my opinion, I could be wrong <g>
Pat
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