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Here are the 7 cheapest stocks in the market now

Being one of the cheapest stocks out there sounds like a good thing. But it would more accurately be characterized as a dubious distinction.

All seven of the most inexpensively valued stocks in the S&P 500 are down in the past year, including three that lost more 50 percent of their value. Those would be oil and gas drilling names Ensco and Noble, as well as Genworth Financial, which has been losing money and is undergoing a restructuring.

Judging by the widely used price-to-forward-earnings metric, which compares estimates of a company's share price to those of earnings expected over the next year, the cheapest stock in the S&P 500 is American Airlines.

The airline stock is trading at a forward P/E of 5.4, versus a median of 17.5 for all the S&P 500 stocks, according to FactSet.

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Recently, American has been beset by big problems, such as increased competition in the domestic airline space and exposure to economic weakness in Latin America.

When it comes to Micron and Hewlett-Packard, investors are raising dire questions about the companies due to continued declines in the PC market. Simply put, investors will fear that the PC business will simply get worse, which means they should pay less per dollar of earnings that these companies are making today.

Indeed, the trend among the names that look "inexpensive" according to the most widely used valuation metric is simple: We're talking about companies that investors, for one reason or another, have lost their faith in. If the prospects were brighter, these companies would be selling at richer valuations.

However, if some of these companies manage turnarounds, then the upside could be great.

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Hewlett-Packard is a "strong buy," said Erin Gibbs of S&P Capital IQ. "HPQ's turnaround efforts remain on track. Growth initiatives in cloud and big data remain possible."

Analysts apparently agree, given that the average analyst target price is $39.88, according to FactSet—31 percent above the stock's Monday closing price.

General Motors, meanwhile, is a classic low-valuation stock that has traded at an average forward price-to-earnings ratio of 7.5 over the past five years, according to FactSet.