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So far, investors who have embraced "risk" (ie, buying any asset priced in dollars) have done amazingly well as extremely loose monetary and fiscal stimuli policies drive commodity and stock indices to new highs. With the strength of the rally and with the Nasdaq at pre-crisis levels, many investors, including Warren Buffett, have begun to wonder if Depression era stimulus policies are appropriate measures to generate robust growth for the middle class. In any event, until the stimulus ends, the bull market for stocks may continue regardless of the geopolitical risk or valuations.

A long/short strategy that looks to hedge undervalued equity positions against overvalued index funds or individual short positions looks like a smart way to make money in both bull and bear markets.

Here are 12 stock ideas for the long side of the ledger that could protect investors from a falling dollar and their updated trailing and forward valuations on earnings:

INTC - Intel sports a P/E ratio of just 9.5X. The April $22 call options trade for $.50 cents, leaving around $.70 cents of upside between now and April 16 for a 3.2% potential gain between now and expiration.

JASO - JA Solar Holdings boasts a P/E ratio of 4.8X and a forward P/E of 6. The June $7 puts can be sold for $.90 cents for a yield of 12.8% over the next 3 months.

HUM - Humana Corporation boasts a PE ratio of 9.7X and an EV/EBITDA of 2X. The Jan 2012 $60 puts can be sold for $5.4 per contract

NWLI - National Western Life is still trading for around half of tangible book value and a P/E ratio of 9.45.

NANO - Nanometrics is a diversified semiconductor component maker which also makes photovoltaic wafers and other components for LED and data storage manufacturers. The stock trades for 7.5X earnings. Investors can sell the Sept. 2011 $16 put options for $2, which provides a nice margin of safety with the stock trading for $18 currently.

HAST - Hastings looks undervalued with a P/E ratio of 8X and a price to tangible book ratio of .5, as well as a price to free cash flow ratio of around 5X.

DO - Diamond Offshore appears to be a bargain at 11X earnings. Given that the Gulf Ban is slowly ending, investors who need exposure to oil services can sell the Jan 2012 $72 put options for $7.2 per contract with the stock currently trading for $78 per share.

SDRL - SeaDrill is a good value at 7X earnings and a hefty dividend yield of 5.2%

BQI - Oilsands Quest has been a tough stock to own over the past several years, but they still own the largest leaseholds in the Canadian Oil Sands and the stock trades for a wide discount to tangible book value. Higher oil prices should help slow the cash burn as the company begins to bring production on line.

KO - Coca Cola is the largest holding of Berkshire Hathaway (NYSE:BRK.A) and makes up over 20% of Berkshire's equity portfolio. The stock looks reasonable at 15X forward earnings. The Jan 2012 $57.5 leap calls can be purchased for $8.5 which provides investors with a built in stop loss while the premium to the current stock price is quite low. Selling the April $65 calls against this position for a calendar spread is an interesting option here.

RIMM - Research in Motion has a P/E of 11.7 with strong historical growth and has rallied strongly since the announcement that the new 4G Blackberry will use the Android operating system. RIMM has a forward P/E of 10.5X and YOY growth over 30%. Investors can sell the Jan. 2012 $67.5 puts for $9 which is an attractive risk reward play that only loses money if RIMM falls below $59 at expiration.

IM - Ingram Micro is another cheap tech stock trading at 10X trailing earnings, a .98 price to book value ratio, and 8X forward earnings. Investors who own the stock already or are considering a new purchase should consider selling the April $20 calls for $.70 cents per contract. IM has a .09X price to sales ratio and a PEG ratio of just .6X according to analysts covering the name.

Source: 12 Undervalued Equities: Buy 8 of Them at a Discount Using Options