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Price-to-earnings ratio is the most commonly used investment metric. The assessment of relative changes in PE ratio over the course of time highlights the low and high multiples investors are willing to pay for the current and future earnings of a company. Most investors would like to compare the current PE of the company with its historical averages. Comparing a company's current P/E ratio with benchmarks such as its historical P/E average can help a value investor determine if the stock is cheap, fully valued or overpriced.

A rule of thumb for stock valuation that is popular on Wall Street is to calculate the sum of the expected growth rate of a stock's earnings plus its dividend yield and divide this by its P-E ratio. The higher the ratio, the better, and the famed money manager Peter Lynch recommends investors select stocks with a ratio of 2 or higher and to avoid stocks with a ratio less than 1.

We identified the top S&P500 (NYSEARCA:SPY) stocks trading below or near the average of its yearly low P/E for the last 5 years. These securities are pretty undervalued compared with other securities in their respective sectors.

EOG Resources (NYSE:EOG): EOG Resources, Inc. and its subsidiaries engage in the exploration, development, production and marketing of natural gas and crude oil primarily in the United States, Canada, the Republic of Trinidad and Tobago, the United Kingdom and the People's Republic of China. EOG has a Return on Assets (ROA) of 4.58% and a Return on Equity (ROE) of 9.06%. The stock is trading with a Return on Invested Capital (ROIC) of 6.48%. The average of the minimum forward price-to-earnings multiples over the last 5 years for the company is 29.10 and the average price-to-earnings multiples in the same period is 44.11. The company is valued at $434.7 using the minimum earnings multiples and $658.9 using the average earnings multiples over the last 5 years. The company has a sum of growth and yield to PE ratio (GY2PE) of 2.0127. EOG is currently trading at $113.38, raising $12 or 12% this year.

Xerox Corp (NYSE:XRX): Xerox Corporation is a global document management company that manufactures and sells a range of color and black-and-white printers, multifunction systems, photo copiers, digital production printing presses, and related consulting services and supplies. The company has a ROA of 3.55% and a ROE of 8.97%. The stock is trading with a ROIC of 5.07%. The average of the minimum forward price-to-earnings multiples over the last 5 years for the company is 18.50 and the average price-to-earnings multiples in the same period is 24.63. The company is valued at $16.8 using the minimum earnings multiples and $22.4 using the average earnings multiples over the last 5 years. The company has a GY2PE of 1.32. XRX is currently trading at $8.02, falling $0.18 or 2.2% this year.

Baker Hughes Inc (NYSE:BHI): Baker Hughes Incorporated is engaged in the oilfield services industry. Baker Hughes is a supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. The company also provides industrial and other products and services to the downstream refining, and process and pipeline industries. BHI has a ROA of 7.52% and a ROE of 12.01%. The company is trading with a ROIC of 9.5%. The average of the minimum forward price-to-earnings multiples over the last 5 years for the company is 11.75 and the average price-to-earnings multiples in the same period is 20.36. The company is valued at $96.9 using the minimum earnings multiples and $167.9 using the average earnings multiples over the last 5 years. The company has a GY2PE of 2.93. BHI is currently trading at $47.90, falling $3.1 or 6.1% this year.

JP Morgan Chase & Co (NYSE:JPM): JPMorgan Chase & Co. is a multinational banking corporation of securities, investments and retail. It is a major provider of financial services, with assets of $2 trillion and according to Forbes magazine (2011 June) is the world's largest public company. The company has a ROA of 0.84% and a ROE of 10.9%. JPM is trading with a ROIC of 3.67%. The average of the minimum forward price-to-earnings multiples over the last 5 years for the company is 11.31 and the average price-to-earnings multiples in the same period is 15.54. The company is valued at $44.6 using the minimum earnings multiples and $61.3 using the average earnings multiples over the last 5 years. The company has a GY2PE of 1.21. JPM is currently trading at $38.30, raising $3.3 or 9.5% this year.

Wells Fargo & Co (NYSE:WFC): Wells Fargo & Company is a diversified financial services company with operations around the world. Wells Fargo provides banking, insurance, investments, mortgage banking, investment banking, retail banking, brokerage and consumer finance through banking stores. The company has a ROA of 1.14% and a ROE of 11.92%. The company is trading with a ROIC of 4.50%. The average of the minimum forward price-to-earnings multiples over the last 5 years for the company is 14.23 and the average price-to-earnings multiples in the same period is 18.74. WFC is valued at $40.6 using the minimum earnings multiples and $53.5 using the average earnings multiples over the last 5 years. The company has a GY2PE of 1.18. WFC is currently trading at $30.62, raising $2.2 or 7.7% this year

WellPoint Inc (WLP): WellPoint, Inc. and its subsidiaries operate as a health benefits company in the United States. It offers various network-based managed care plans to large and small employer, individual, Medicaid and senior markets. The stock has a ROA of 5.6% and a ROE of 11.9%. The company is trading with a ROIC of 8.8%. The average of the minimum forward price-to-earnings multiples over the last 5 years for the company is 7.16 and the average price-to-earnings multiples in the same period is 8.90. The company is valued at $47.9 using the minimum earnings multiples and $59.5 using the average earnings multiples over the last 5 years. The company has a GY2PE of 1.26. WLP is currently trading at $64.66, falling $2.9 or 4.4% this year.

Hewlett-Packard Co (NYSE:HPQ): Hewlett-Packard Company offers various products, technologies, software, solutions and services to individual consumers and small- and medium-sized businesses, as well as to the government, health and education sectors worldwide. The company has a ROA of 5.57% and a ROE of 17.89%. The stock is trading with a ROIC of 10.72%. The average of the minimum forward price-to-earnings multiples over the last 5 years for the company is 8.48 and the average price-to-earnings multiples in the same period is 11.66. The stock is valued at $25.2 using the minimum earnings multiples and $34.6 using the average earnings multiples over the last 5 years. The company has a GY2PE of 0.8. HPQ is currently trading at $28.75, rising $2.1 or 8% this year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.