) -- If I told you stocks were cheap right now, you'd probably think I was crazy.
After all, equities have been in the midst of a broad-based rally for the last few years, and the venerable
index finally hit new all-time highs last week. Price action like that doesn't exactly go hand-in-hand with bargain valuations on Wall Street, but in fact, some stocks are looking downright cheap in this environment.
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One of the biggest reasons for that is earnings. While stock prices have been moving swiftly upward since 2009, earnings have actually moved in lock-step with stock prices, justifying the loftier cost to buy shares for your portfolio. As I write, the S&P's average price-to-earnings ratio, a measure of how much investors are paying for every dollar of a firm's earnings, sits at 15.4.
That's well below the index's average P/E reading of 18.8 over the last 25 years.
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But take out one big factor from P/E, and the "stocks are cheap" story gets even more interesting; I'm talking about cash. As I write, U.S. corporations are sitting on record cash reserves, a balance sheet number that totally skews the valuation numbers for firms with lots of dollars in their coffers by inflating the P/E ratio. I think that it makes more sense to look at stocks' earnings multiples ex-cash. And after backing out cash, there are some head-scratching valuations on Wall Street right now.
Today, we'll take a look at
five of them
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