The Finish Line (NASDAQ: FINL) represents a great recent example of how markets behave irrationally. FINL operates 700 stores in the US selling brand-name athletic footwear. In March of this year, following a settlement with Genesco after a botched deal, FINL traded at just over $4 per share, for an approximate market cap of $233 million. Let's take a look at their balance sheet from that time period:

Cash: $73 million
A/R: $8 million
Inventory: $268 million
PP&E: $434 million
Total Debt: $0

Therefore, even if you believe that all their fixed assets are worth nothing, you would still be buying brand-name athletic footwear at a discount. Of course, you'll never want to leave an analysis at that. As we've discussed here, you'll want to read the notes to the financial statements and make sure you understand what the company is up to. You'll also want to make sure management is not running the company into the ground, which you can judge by looking at their operating earnings for the past several years.

Here's a look at what has happened since March. A prudent value investor has made a killing:

View the full FINL chart at Wikinvest