EBITDA Multiple

Looking at the Dow 30, and going with 6.5 as a standard for which to judge value, there are 4 stocks that are under that multiple. The EBITDA is TTM and EV is MRQ.

Chevron (CVX), Exxon (XOM), AT&T (T), and Merck (MRK) are the four. The oil companies are on the list because of EBITDA from April to Sept. last year. Even so Chevron makes the cut based on last 2 quarters as well. AT&T has a large capital requirement which of course is disregarded in EBITDA. Merck is just an all-around good value. For one the Enterprise Value is not much more than the Market Cap, and secondly it's PE is strong.

We'll open an index tomorrow with the 4 stocks and check performance compared to the broader market. EBITDA Mult.<6.5. No weighting; just 25% for each until the index is modified. Modification will come based on (1) a stock has increased in price or has released new financials and is no longer eligible or (2) a new stock is found to be included or a previously rejected stock has either decreased in price or released more favorable financials to make it qualify.