Widely followed strategist Ed Yardeni said the overall stock market looks fully valued, but there are some cheap stocks out there in sectors that have been beaten down by bad headlines.
"The view from the top of the S&P 500 certainly doesn't look especially attractive from a valuation perspective," Yardeni wrote in a note to clients Tuesday.
"However, there may be room for stock multiples to expand further, especially for beaten-up sectors like financials and health care."
The strategist said the index fetches a forward price-per-earnings multiple of 16.5, near its highest level in at least a decade.
That multiple is even higher for other market benchmarks such as the S&P MidCap 400 and the S&P SmallCap 600, which trade at forward multiples of 17.3 and 17.6 respectively, according to Yardeni's analysis.