Three Bargain Stocks to Buy Now

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BOSTON (TheStreet) -- Second-quarter earnings trounced expectations, propelling the S&P 500 Index above 1000 yesterday for the first time this year. Economic recovery may be in our sights.

As money trickles back into the market, it will boost stocks that were trampled in the March sell-off. Here are three classic value investments with cheap shares, consistent dividends and steady growth prospects. Each comes from an unpopular, old-line business that can't hold the attention of return-obsessed investors.

Altria(MO Quote) sells tobacco products, including Marlboro and Parliament cigarettes. The company acquired UST, the leading supplier of smokeless tobacco, in January to strengthen its domestic focus. In March 2008, it spun off Philip Morris International(PM Quote).

Investors have been piling into Philip Morris International as demand for tobacco grows overseas, but Altria offers a better deal. The stock has gained 15% this year, outpacing the S&P 500's 13% advance. It's trading at a 2009 price-to-earnings ratio of 11.6 and a 2010 price-to-earnings ratio of 9.6, making it cheaper than Philip Morris International and S&P 500 companies.

Altria has a durable business model and is benefitting from recent acquisitions. Second-quarter earnings rose 9% to $1 billion, or 49 cents per share, as revenue increased 10% to $4.6 billion. Its operating margin expanded from 33% to 39%.

The stock's obvious selling point is its 7.3% dividend yield, compared with 3.4% for the S&P 500. The quarterly payout ratio, the amount of earnings distributed as dividends, is reasonable at 60%.

Altria has nearly $13 billion of long-term debt and quarterly interest expenses of about $287 million. But it's a small burden compared to its brand power and cash flow.