Stocks go for a song; even blue chips seen as undervalued

— -- Looking for cheap stocks? Skip the calculator and fancy spreadsheets. All you need is a blindfold.

The market has so fiercely pummeled stocks, knocking them to 1996 levels, that investors can almost pick value-priced stocks at random, investment professionals say.

The plentitude of stocks with historically low valuations might be the one bright spot in an excruciatingly painful bear market that's wiped away half of stocks' value from the 2007 high.

Forget P-Es, PEGs and price-to-book ratios. All that's needed now is guts and patience.

"Just name a stock," says Marc Gerstein, research consultant with Portfolio 123, which builds databases to study stocks. "It's undervalued."

It would be naive to ignore the pain. Some declines by individual stocks are breathtaking. Even classic "good companies" — such as General Electric, ge Alcoa aa and Southwest Airlines luv— now trade below $10 a share.

In fact, among the largest U.S. stocks in the Standard & Poor's 500, five are trading for less than $1, 12 are below $2, and 51 are under $5.

But where some investors see pain, others see possibility, in that:

•Stocks aren't just on sale, they're selling at fire-sale prices. More than half the stocks in the S&P 500 are trading for less than the market's long-term historical average P-E of 15 times expected earnings, says S&P's Capital IQ. In fact, 192 members of the S&P have a P-E of 10 or less based on their earnings in the past 12 months. Just 36 companies had P-Es that low at the end of 2007.

"You could throw a dart" at a list of stocks and find a cheap one, says Bob Olstein of Olstein Capital Management. "Values are off the wall."

•"Good" companies' stocks are on sale, too. During this correction, even the bluest of blue chips are being tossed away like trash.

That means investors can still find great deals on companies with strong long-term track records.

"You don't have to own garbage to be a value investor," says Larry Coats, co-manager of the Oak Value fund.

Coats owns stocks he never thought would get into his price range, including MasterCard, ma United Technologies, utx 3M, mmm Oracle, orcl Microsoft, msfteBay ebay and Cisco. csco All these companies sport strong operating profit margins and return on equity, fundamental metrics usually reserved for the stocks with the richest prices.

"If you can't find a good business to buy at a good valuation, you're just not paying attention," he says.

•Technology is getting dragged in, too. For years, investors eager to buy into technology have been cautioned that the valuations were too high.

But investors who wanted to buy tech should think about it now, says Jack Ablin at Harris Private Bank. Even tech stocks whose share prices are above $10 a share have seen their valuations severely contract.

Google, goog while still trading for nearly $300 a share, now has a P-E relative to its expected growth rate, or PEG, of less than 1, says Capital IQ. Technology investors have been willing historically to pay PEG ratios of 1.5 or even higher for leading technology stocks.

Tech is particularly attractive because the industry has been fiscally prudent and shied away from excessive borrowing.

The tech sector, on average, has just $25 in debt for every $100 of shareholder equity invested, says Thomson Reuters. For the S&P 500, there's $65 of debt for every $100 of equity.

Many tech companies, too, are sitting on considerable piles of cash, Ablin says. Dell, dell for instance, ended January with $4.29 a share in cash, not far from its $8.04 a share stock price.

But just because stocks, by and large, may be cheap, that doesn't mean investors should assume they'll make a killing overnight. Clearly, the economy could still worsen. Stocks could struggle if the economy shrinks and prices for goods fall, Ablin says.

And just as stocks have shot to unsustainable heights during past bubbles, they can sink to absurd low levels, too, he says. But at least investors have confidence they're paying less than investors were willing to pay two years ago.

"We'd be naive to not think stock prices may overshoot to the downside," Ablin says. "But anyone buying now is buying right. It might not be perfect, but they're buying right."