Most of my columns are about small and medium-size stocks because I think those stocks are more likely than their bigger brethren to be undiscovered and underpriced.

Yet, some investors prefer big stocks, taking the view that the size, diversity and international exposure typical of many large-capitalization stocks make them safer investments. So, for those people who prefer elephants to bobcats, here is a look at the 50 largest U.S. stocks, and my opinion on which ones offer superior value.

I hate to say it, but there aren't many.

The giants of American industry, on average, fetch a premium stock price. The median price/earnings ratio (stock price divided by per-share earnings for the past four quarters) for all 3,964 stocks with a market value above $100 million is 27, as of last week. The median P/E ratio for the 50 biggest stocks (each of which had a market value of $66.7 billion or more) is 33.

For my clients, I frequently buy stocks that sell for 15 times earnings or less. In the current market, that is considered cheap. Over the decades, however, a P/E of 15 has been about average. In the broad sample of 3,964 stocks mentioned above, 31 percent sell for 15 times earnings or less.

Among the 50 largest stocks, only three Bank of America Corp., AT & T; Corp. and Philip Morris Cos. sell for 15 times earnings or less. Three stocks out of 50 works out to just 6 percent. So you are much more likely to find a cheap stock if you search among small and medium-sized issues than if you search among the biggest stocks.

Conversely, only 5.3 percent of stocks in the broad sample sold at 100 times earnings or more. But 11 of the biggest 50 stocks do, which is 22 percent. The highest P/E ratios among the largest 50 stocks belong to Qwest Communications International Inc. at 292 times earnings, JDS Uniphase Corp. at 219 times earnings and Time Warner at 186 times earnings.

It's no surprise that the biggest stocks tend to be expensive. We are talking about the likes of General Electric Co. (No. 1 in market value at $577 billion), Cisco Systems Inc. (No. 2 at $391 billion) and Microsoft Corp. (No. 3 at $319 billion). These are highly successful companies, which is how they came to be so big in the first place.

The value strategy

These blue chips probably deserve to sell at a premium. But that doesn't mean that I want to buy them. As a value investor, my goal is to find bargains, not just to salute corporate excellence.

I do like Bank of America, AT & T; and Philip Morris. Bank of America and Philip Morris are holdings of Dreman Value Management LLC, with which I have an affiliation.

Bank of America was formed in a 1998 combination of BankAmerica Corp. and NationsBank Corp. Billed as a merger, it was really a takeover of San Francisco-based BankAmerica by Charlotte-based NationsBank.

Bank of America earned a return of 1.26 percent on assets and 17 percent on stockholders' equity last year; both figures are respectable to good. At last week's closing price of $53.06 a share, the stock sells for a P/E of 11. It pays a 3.8-percent dividend.

AT & T; is a stock I have just recently come to like. In May 1998 with the stock at $65.44 a share, I said the company was "too large to show the kind of peppy growth the current multiple implies."

At that time, the multiple was 20 times estimated 1998 earnings. AT & T; stock has since dropped to $29 a share, equal to just 13 times the past four quarters' earnings. In some ways, it's not the same company it was two years ago. It has more debt and is more geared to cable and wireless than it used to be. But the debt seems quite manageable and the bet on cable and wireless technologies is probably a good one.

Once-mighty Philip Morris, the world's biggest tobacco company, has fallen to $29.94 from $58.25 a share in November 1998. People who followed my advice to buy it in the past have lost a lot of money on this stock: The tobacco lawsuits have hurt the tobacco companies more than I anticipated.

Philip Morris' strengths

Nevertheless, I believe that people who buy this battered stock today will have a more pleasant experience. The stock is selling for nine times recent earnings and offers an annual dividend of 7.1 percent. And despite all of the tobacco industry's legal problems, Philip Morris has managed to show 10-percent annual earnings growth over the past five years. I believe Philip Morris will succeed in selling the public a 20-percent interest in its food operations (Kraft and Nabisco) next year, which will have the effect of raising the parent company's stock price.

Six of the 50 biggest stocks sell for 15 to 20 times earnings. They are Verizon Communications, Morgan Stanley Dean Witter & Co., WorldCom Inc., Fannie Mae, BellSouth Corp. and Wells Fargo & Co. Dreman owns shares in Fannie Mae and Wells Fargo. My favorite in the group is Fannie Mae, the biggest buyer of U.S. home mortgages. And I think Verizon, the nation's largest local-phone company, is worth considering at its current price ($47.38 a share, or 16 times earnings), although I hate its new name. What was wrong with Bell Atlantic Corp.?

John Dorfman, president of Dorfman Investments in Boston, is a columnist for Bloomberg News. His firm or its clients may own or trade investments discussed in this column.

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