*This is a bottom-up estimate derived from the estimates for the index components.
Sources: Index values, Author's calculations, based on data from Capital IQ and Standard & Poor's.

If you're looking for some specific names, I ran a screen for "safe" stocks in these sectors, inverting the criteria of GMO strategist James Montier’s screen for stocks that could cause permanent losses. The resulting stocks are priced at less than 16 times cyclically-adjusted earnings and don't appear to exhibit significant bankruptcy or earnings risk. Here are three of the names that came up:

Company

P/E (2009e earnings)

Cyclically-Adjusted P/E Ratio*

National Oilwell Varco (NYSE: NOV)

8.6

8.3

Moody's

17.3

11.0

ConocoPhillips (NYSE: COP)

11.9

8.9

*Price divided by average earnings-per-share over the prior 10 years. Note that this P/E differs from the one cited for the S&P 500 below; the latter uses inflation-adjusted earnings.

Lower-risk sectors
At the other end of the spectrum in terms of earnings uncertainty, are consumer staples and health care. These sectors also look appealing right now, particularly for investors with less appetite for risk. They are defensive sectors, of course -- but that's not all.

Consumer staples and health care were left behind by most sectors in the stock market rally from the March 9 low (see table above). That trend looks set to reverse, as they appear reasonably priced; I expect investors to warm to them as the market comes to terms with an anemic economy recovery (I don't think such a recovery has been fully factored into stock prices yet).

The following table contains four names that were produced by the same screen I referred to earlier and may be worth further scrutiny:

Company

P/E (2009e earnings)

Cyclically-Adjusted P/E Ratio*

Wal-Mart Stores (NYSE: WMT)

13.6

15.3

Walgreen (NYSE: WAG)

14.1

14.2

Zimmer Holdings (NYSE: ZMH)

10.2

11.3

Bristol-Myers Squibb (NYSE: BMY)

10.2

13.9

*Price divided by average earnings-per-share over the prior 10 years. Note that this P/E differs from the one cited for the S&P 500 below in that it is based on nominal earnings, while the latter uses inflation-adjusted earnings.

And one sector worth avoiding
Now that I've highlighted four sectors that I think are relatively attractive, I'll leave you with a warning regarding one that I find distinctly unattractive: consumer discretionary. At nearly 20 times estimated 2009 earnings, it looks pricey at a time when discretionary item purchases are much harder for consumers to justify (to themselves and/or their bankers). As investors come to terms with an economic environment that is permanently different ("permanently" insofar as stock valuations are concerned, in any case) than the one they have known until recently, that valuation may not hold up. Happy hunting!

Looking for even more stock names? Morgan Housel identifies three high-quality companies that are still cheap.