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Are Stocks Cheap Enough Yet?

Stocks opened lower but then bounced into the green on Friday as investors weighed the cheap valuations against the backdrop of economic uncertainty.

Although the crisis in Europe shows few real signs of abating, stocks have declined sharply over the past few sessions. JP Morgan’s Thomas Lee points out that 53% of stocks now have a P/E ratio of less than 12. That’s the lowest level since 2008.

Quite simply he thinks investors just can’t pass up a bargain. “Stocks get cheap enough that buyers are enticed," he says.

Lee goes on to suggest a slew of names are attractive; names such as Cognizant , Priceline , Tiffany , Coach, Intuit and F5 to name but a few.

Is he right? Are stocks just so cheap you should hold your breath and buy?

Instant Insights with the Fast Money traders

Jon Najarian agrees with Lee and suggests hitting the buy button. Najarian believes the market has made its low for the year and that 1120 will hold on the S&P. (Click here for an in-depth explanation of Najarian's bullish thesis.)

With the S&P trading just slightly above a level that Najarian thinks is strong support – he suggests playing for a bounce. Names that he particularly likes include FedEx , Nike , and US Steel .

Brother Pete Najarian largely agrees with the thesis. But he’d put money to work in the chip space. “Many of those names are just way too cheap,” he adds.

If you’re a trader, Steve Grasso agrees that in the short-term the path of least resistance could be higher. “If the S&P pops above 1142 – then the SPX is buyable for another percentage move.”

However, Grasso is talking about a real short term move. He also says the momentum in the market is being generated by “shorts that are locking in gains. With so much uncertainty, shorts don’t want to be caught off guard into the week-end.”

Trader Brian Kelly concedes if you’re nimble, you can buy for a bounce into the close, but big picture he adds, “I don’t think stocks are cheap. I don’t think we’re out of the woods by any stretch.”



Pete Najarian is closely watching the options action in Yahoo!

He says the spreads as well as the volume of call buying suggests to him that major money is looking for more upside.



Are Stocks Cheap Yet?

Silver plunged on high volume Friday. Is it too late to get short?

Find out from Dan Dicker, president of Mercbloc and author of Oil’s Endless Bid. Watch the video now!

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Trader disclosure: On Sep 23, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Najarian owns call spreads on Apple (AAPL); Najarian owns call spreads on ANF; Najarian owns call spreads on XOM; Najarian owns call spreads on EBAY; Najarian is long CIGX

Jon Najarian
**No disclosures

For Brian Kelly
Funds managed by Shelter Harbor Capital are long Euro
Funds managed by Shelter Harbor Capital are long MON
Funds managed by Shelter Harbor Capital are long MCP
Funds managed by Shelter Harbor Capital are long TLT
Funds managed by Shelter Harbor Capital are short Aussie dollar
Funds managed by Shelter Harbor Capital are short SLV

For Willie Williams
**No disclosures

CNBC.com with wires.