The popular Discounted Cash Flow (DCF) model requires a number of assumptions on future cash flow, terminal growth rate and discount rate. Beautiful as it is mathematically, the model will not readily work if a company does not have positive initial free cash or that from the past 12 months. Believe me, companies do make negative free cash flows, sometimes not due to their own faults. Obviously, companies making negative free cash flows in the immediate past do not warrant a negative intrinsic value.

Two alternative models circumventing the issues of DCF are devised here at GuruFocus to screen the stocks: Historical Low P/S and Historical Low P/B. The first screener divids the stock price against the sales of the company and identifies the companies that are near historical low P/S ratios, and the second looks for values among the stocks selling at a historical low discount against its book value.

Results are available for each model in real time. We also took the screening results at the beginning of the year and started to track the performances of these model portfolios. So far, both model portfolios are doing rather good: Since the beginning of the year, the S&P 500 index has declined 8.3% yet the Historical Low P/B portfolio is down only 2% and the Historical Low P/S bunch has lost only 0.2%. Although a six-month track record is probably too short to brag about, we would our members to keep an eye open and check back from time to time to scout out new entries for investment ideas in both lists.

Back to 25 companies for each strategy were taken at the beginning of 2010, for the Low P/S strategy, the following stocks made double digit gain during the first half:

Symbol	Company	# of Shares	Bought on	Share Cost	Current Price	Change	Value ($)
AZO	AutoZone Inc.	25	01/02/2010	$158.07	195.01	+23.37%	4,875
FDO	Family Dollar Stores Inc.	144	01/02/2010	$27.83	38.62	+38.77%	5,561
LBAI	Lakeland Bancorp Inc.	626	01/02/2010	$6.39	8.15	+27.54%	5,102
MRTN	Marten Transport Ltd.	223	01/02/2010	$17.95	20.96	+16.77%	4,674
SJI	South Jersey Industries Inc.	105	01/02/2010	$38.18	42.6	+11.58%	4,473

AutoZone Inc. (AZO)

Autozone is the nation's specialty retailer of automotive parts and accessories, primarily focusing on do-it-yourself customers. Autozone Inc. has a market cap of $9.51 billion; its shares were traded at around $195.01 with a P/E ratio of 14.1 and P/S ratio of 1.39. Autozone Inc. had an annual average earning growth of 19.4% over the past 10 years. GuruFocus rated Autozone Inc. the business predictability rank of 3.5-star.

Family Dollar Stores Inc. (FDO)

Family Dollar Stores, Inc. is one of the fastest growing discount store chains in the United States. Family Dollar Stores Inc. has a market cap of $5.22 billion; its shares were traded at around $38.62 with a P/E ratio of 16.43 and P/S ratio of 0.7. The dividend yield of Family Dollar Stores Inc. stocks is 1.61%. Family Dollar Stores Inc. had an annual average earning growth of 6.8% over the past 10 years. GuruFocus rated Family Dollar Stores Inc. the business predictability rank of 4-star.

Lakeland Bancorp Inc. (LBAI)

LAKELAND BANCORP INC. is a bank holding company engaged in general banking business. Lakeland Bancorp Inc. has a market cap of $195.61 million; its shares were traded at around $8.15 with and P/S ratio of 1.28. The dividend yield of Lakeland Bancorp Inc. stocks is 2.45%.

Marten Transport Ltd. (MRTN)

Marten Transport, Ltd. is a long-haul truckload carrier providing protective service and time- sensitive transportation. Marten Transport Ltd. has a market cap of $459.46 million; its shares were traded at around $20.96 with a P/E ratio of 28.71 and P/S ratio of 0.91. Marten Transport Ltd. had an annual average earning growth of 3.6% over the past 10 years. GuruFocus rated Marten Transport Ltd. the business predictability rank of 2.5-star.

South Jersey Industries Inc. (SJI)

South Jersey Inds Inc. is an energy services holding company that provides energy related products and services . South Jersey Industries Inc. has a market cap of $1.27 billion; its shares were traded at around $42.6 with a P/E ratio of 17.68 and P/S ratio of 1.51. The dividend yield of South Jersey Industries Inc. stocks is 3.1%. South Jersey Industries Inc. had an annual average earning growth of 5.2% over the past 10 years.

To find the complete list of the model portfolio, click here. We believe it is an good exercise as the real value probably is buried among the stocks that did not make double digit gain during the past six months.

To find the real time result for stocks selling at lowest P/S ratio in the company’s history, click here.

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