Companies don't operate within a vacuum. It's important to understand industry dynamics as well as valuation.

It's also important to understand where equities (and other asset markets) are within their respective cycles. For instance, in early/mid 2011, when many leading indicators were pointing towards economic weakness, and when, by historic measures such as Shiller P/E etc. the US equity markets were not cheap, and infact quite expensive (some metrics, such as forward market P/Es using operating earnings at historically high margins showed the market was cheap, but these are often misleading and not reliable), suppose you didn't pay any attention to the macro picture, and suppose that you simply looked at companies individually, without considering industry dynamics and valuation (as well as relative valuation and performance). You may have found various cyclicals that looked very cheap (automakers for instance). Perhaps they were trading at a substantial discount to historic P/E, EV/EBIT etc., and DCF valuation led to a very attractive valuation. When the slowdown became more apparent within the numbers, cyclicals got hit hard, and many dropped substantially, even those that were already cheap. If you understand capital market dynamics, and you pay attention to the macro picture, and see that economic weakness (or slowdown) is approaching, then you would know that noncyclicals, specifically consumer staples and utilities are better places to be during such an environment. So you would put the cyclicals (and other cheap stocks you find) on a watchlist, and wait until the time is right (in the midst of a recession, or towards the end, these types of stocks are likely to recover more quickly as the economic picture gets better).