Mere fact that a stock is trading at a low valuation multiple does not make it an attractive buying opportunity. In either case spotting a good buying opportunity requires rigorous research and this is what Gabelli is really good at. Stocks with low multiples and high multiples need to be investigated relative to the peer group or the industry to which they belong before concluding whether they are overvalued, undervalued or fairly valued.
Gabelli’s PMV with a catalyst methodology provides such a framework for analyzing stocks. Furthermore, stocks trading at a substantial discount to their intrinsic value provide a margin for safety to the investor. This further reduces the potential risk of an investment