The Internet as a value play makes for some strange bedfellows.

Take the case of

Big Flower Holdings

(BGF)

, a classic value play that was championed by bargain hunters but shunned by today's go-go investors, who had discarded the company's "old media" printing business as ho-hum.

But as news spread that Big Flower had acquired stakes in some glitzy Internet startups, the stock surged 23% this week alone. That's more than the shares gained in the past year. Friday it closed at 33 1/8, up 3/4.

No matter that Big Flower's combined stakes in four Net companies worth an estimated $120 million, or $5 per BGF share, is peanuts when compared with the company's overall size. Investors snapped up shares following a research note published Monday by Steven Barlow, a

Credit Suisse First Boston

analyst, outlining the company's strategy.

Ironically, Big Flower had considered its Internet stakes immaterial and chose not to discuss them -- a departure from many companies that rev up the publicity machine as soon as they can work the word e-commerce into a press release. And investors failed to make the connection because many of the investments were made in the name of

XL Ventures

, a Big Flower subsidiary.

Even Barlow, who's been talking up the issue to clients, concedes the investments are insignificant in their own right, and instead serve as a catalyst to get investors interested in the stock.

"Investors don't want to hear that business is fine, and they'll make their numbers," says Barlow, who rates Big Flower a strong buy. (His firm has performed underwriting for the company.) "It's not enough in this environment to get people excited. We hope our discussion will get people interested in an undervalued name."

By almost any metric, Big Flower looks cheap, even after this week's sharp appreciation. It's trading at almost 18 times trailing earnings, compared with the average stock in the S&P 500 Index, which is trading at 29 times. Its P/E also trails

Harte-Hanks

(HHS) - Get Report

, a competitor in the direct marketing arena, that trades at 32 times trailing earnings. And its price-to-sales, another value measure when less than one, is 0.37.

Yet Big Flower is no slouch from an earnings standpoint. The

First Call

consensus expects earnings will grow by 18% to $2.14 a share this year. That's faster than the average S&P stock (7%) and Harte-Hanks (16%).

As a leading advertising firm, Big Flower counsels some of the nation's largest retailers -- marketing gurus in their own right like

Home Depot

(HD) - Get Report

and

Wal-Mart

(WMT) - Get Report

-- on honing their message to peak customer interest. Yet the company has been slow in turning that maxim to its own advantage.

Maintaining a low profile, Big Flower declined to comment for this story, citing the quiet period preceding the initial public offerings of several Internet companies in which it has stakes.

The company's core business -- placing advertising inserts and supplements in newspapers and magazines -- has been discarded by investors in a world where the New Economy is steam rolling old media relics.

"People have been focusing on 'ooops, it's a printing company' and stopping there," Barlow says.

In so doing, investors have overlooked a few interesting morsels. Printing makes up a declining portion of Big Flower's revenue. Last year, printing accounted for an estimated 50% of the company's roughly $1.8 billion in revenue, down from 80% two years ago, analysts say. Big Flower has been investing its free cash flow -- which totaled an estimated $36 million last year and is expected to grow to $60 million this year -- in newer media businesses like digital mail and software. Those operations carry profit margins in the high teens, compared with printings' lower 10% margins.

For the nine months ended Sept. 30, Big Flower earned $22.4 million, or $1.03 per share, compared with the year earlier's $12 million, or 63 cents per share, excluding an extraordinary charge of $13.4 million, or 70 cents per share. Sales climbed 29% to $1.2 billion. (The company has yet to release its annual numbers.)

Then there's the Internet. Big Flower owns 1.75 million shares in

24/7 Media

(TFSM)

, a Web marketing and advertising firm that went public in August. And it has 737,864 shares in

MiningCo.com

(MINE)

, an Internet search provider that saw its stock soar 90% on Wednesday, its first day of trading. There's also an unspecified stake in

Worldgate Communications

, a Net provider via cable television that's filed for an IPO. And Big Flower is an investor in

Andromedia

, a privately held Web software marketer.

Still, the Internet talk leaves certain investors, who bought the stock because they considered it a bargain, bemused.

"When we bought the stock there was no Net play," says one money manager who asked not to be named. "And we don't think that has much to do with the fundamental value of the company." He figures the stock would be fairly valued in the low to mid-40s.