I think that serious investors look at the enterprize value to cash flow as being more important than the ratios which you cite. Also, the book value ratio has been increased by the high share repurchase program. Finally, the eps projection for the current year is about $3.20, which would make the multiple about 24x. All that being said, the current price reflects optimism about the future on a par with the rest of the market. The market itself is overvalued from a historical standpoint by at least 25%, and perhaps as much as 50%. It is hard to find undervalued companies in this market, just ask Warren Buffett.
The risk to me far outweighed the potential upside reward, which is why I shorted @ 79 and covered 1/2 today with the expectations of covering the other 1/2 tomorrow. It was not a huge trade, but I'll take it.
As for the value stocks... I agree that the market is overvalued and probably by more than 25%. I focus on small companies with real fundamentals that trade at a discount to tangible book and annual sales. I also usually like companies with low debt/equity ratios also. It is this strategy that over the long run has kept me in the black each year.
Good luck I am not trying to cast a black cloud or spread doom, just reading what is in the cards and AZO is primed for a drop without the news. If you are long I would seriously re-assess the situation.
I'm currently about two months away from a long term gain in AZO. I think they have done a hell of a job and will have good comparisons at least through mid year 02. AZO certainly is not the screaming buy it was at $25. I agree with your philosophy as it mirrors my dead cat fund. No more than 2x sales, less than 3 times book, good debt to equity (varying by industry), and a PE under 20. Aloha! Take a look at CPN and HAL. A lot of dust in the wind but real value.