A group of apparel stocks has been trading at roughly 16 times earnings, compared with the market multiple of 18.

"A dollar dropped to the bottom line, with a market multiple of 20, is $20."

In that environment, is it worth paying the kind of market multiple that is demanded?

If earnings rise and if Harman begins to trade closer to the average market multiple of about 10, investors could realize a 50 percent return.

"Decent regional banks should trade at average market multiples."

Current Strategy: "To get something for nothing - a higher growth rate than market, or better returns, while paying less than market multiples."

One could argue it is actually trading below the market multiple of free cash flow.

Like Mr. Dutton, he sells stocks when earnings hit market multiples.

How the subject company compares to the industry will help with the risk assessment and ultimately help determine the discount rate and the selection of market multiples.

That is still considerably below the current market multiple of more than 24 for the Standard & Poor's 500.