In other words, a low price-sales ratio is just the beginning.

Investors who look to the price-sales ratio say it has several advantages.

The price-sales ratio can also be a window on a company's near-term potential.

Some, however, turn to a lesser-known instrument: the price-sales ratio.

A company's price-sales ratio could be the key.

But a low price-sales ratio often applies to a company that already has significant sales; its costs just eat up much of its profits.

(Because banks have no sales, price-sales ratios cannot be used to evaluate their stocks.)

To compare stocks from different countries, Mr. Bousa uses the price-sales ratio, which divides an equity's price by the company's sales per share.

MR. BOUSA also seeks companies that have low price-sales ratios and are cutting costs.

"The price-sales ratio captures your imagination," said Edward Bousa, portfolio manager of the Putnam Equity Income fund.

Similarly, according to Standard & Poor's stock reports, Fleming Companies had a rock-bottom price-sales ratio in part because supermarkets are starting to be food distributors themselves.

But one of the first lessons of the price-sales ratio, Mr. O'Shaughnessy and others said, is that a low ratio by itself does not necessarily signal a good investment.

"Because the American economy has been booming over the last 12 years, many companies have extraordinarily high profit margins, which translate into very high price-sales ratios," Mr. Conreur said.

Other enterprises with low price-sales ratios belong to out-of-favor industries like paper and forest products, which are under pressure from lower-cost foreign producers and hurt by the strong dollar, according to Mr. Bousa.

For example, many companies in the survey have low price-sales ratios because they are in inherently low-margin businesses - discount retailers, say, like Woolworth and Walgreen, which had ratios of 0.37 and 0.84, respectively.

Of the 432 companies in the survey, which was conducted on Wednesday, Microsoft had the highest price-sales ratio, at 12.5, while the Fleming Companies, one of the nation's largest food wholesalers and distributors, had the lowest ratio, at 0.04.

With Internet stocks rising despite big losses, investors and analysts in other emerging, technology-driven industries began to believe that their stocks should also be valued on hypothetical measures like ultimate market size, rather than on the basis of more traditional measures like price-earnings or price-sales ratios.