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After a pretty strong start to the year, equities have had a recent pullback (thanks in large part to the "fiscal cliff") that have left them attractively priced at just over 13.5x next year's estimated earnings. With the 25 year average forward P/E for the S&P at a hair under 15x, equities would have to appreciate more than 11% simply to hit their long term average P/E.

While equities as a whole look attractively priced, there are a few that look incredibly cheap. The ten stocks below represent the "dogs" of the S&P 500: the ten cheapest stocks in the S&P 500 on a forward earnings basis. (source: Capital IQ)

Company (Ticker)Forward P/E
Hewlett-Packard (NYSE:HPQ)4.10
Best Buy (NYSE:BBY)5.27
Pitney Bowes (NYSE:PBI)5.38
Lincoln National (NYSE:LNC)5.75
Western Digital (NASDAQ:WDC)5.86
Seagate Tech (NASDAQ:STX)5.93
Goodyear Tire (NASDAQ:GT)5.96
Dell (NASDAQ:DELL)6.25
Xerox (NYSE:XRX)6.27
MetLife (NYSE:MET)6.29
Average5.71

Every one of the stocks on the list has a bit of "hair" on them. But what's so interesting is how many of the issues are related to each other.

For example, HP is obviously dealing with the fallout from some poor acquisitions (hello, Autonomy!), but it's also dealing with declines in its core PC market. The same, of course, could be said of Dell, but Western Digital and Seagate are also dealing with similar worries as investors fret that their storage technology will fall out as consumers shift away from traditional hard drives. And it's hard not to see the similarities between HP and Xerox, two old line tech giants trying to find their way in the new tech world.

Even Best Buy fits into this story line, despite the radically different industry. It's almost impossible to justify Best Buy's current price based on its recent financial performance. Investors are clearly discounting the future as Amazon (NASDAQ:AMZN) and the "showrooming" effect continue to eat into profits. Simply substitute "Apple (NASDAQ:AAPL)" for "Amazon" and "Ipad" for "showrooming", and we could easily be talking about HP instead of Best Buy.

So yes, each of these companies have their issues. But consider this: each of these companies could double and still be cheaper than the S&P. And each of them certainly has opportunities in front of them.

For example, Best Buy is still the largest electronic retailer in the U.S. It still has an enviable store footprint, and investors could do well if its founder can put the financing together to put it private. If not, it's hard to imagine it doesn't have some strategic options to fight back against "showrooming" given its massive footprint and geographic distribution. As Barnes and Noble has shown with its Nook, having a big physical presence can still help spur wide spread adoption for a new platform and attract attention from tech giants like Microsoft.

So ignore the noise and consider investing in these "dogs". Each is priced for a doomsday scenario, and not much needs to go right for an investment at today's prices to prove lucrative. In other words, investing in a basket of each of them at today's prices is truly value investing at its finest.

Source: Here's Why You Should Kick The Year Off With The 10 Cheapest Stocks In The S&P 500