Multiples are one of the most popular "yardsticks" when it comes to finding undervalued oil and gas stocks to buy.
More often than not, that involves a hard look at the multiple of a company's earnings to determine whether or not a stock is fairly valued.
In the case of energy stocks, however, there is a more important multiple you need to understand. Much more important, in fact, and more reliable, too.
I generally use it to target oil and natural gas stocks, although the "yardstick" can be tweaked to apply to power producers, and even coal and uranium miners.
It's a way to cut through some of the fast and loose "games" management can play with its reserves, too, and to get a more accurate feel for a company's booked reserves and its trading price.
Ultimately, my yardstick takes into consideration the extractable reserves a company has in the ground and opens up a window into how that stock should trade.
I've used this measure time and again to bring home market-beating double- and triple-digit wins.
Once you understand how to use this yardstick, you can too.