In normal times, an unemployment figure hovering within spitting distance of 10% would be bad news indeed. These are far from normal times, of course, and the stock market has been defying the laws of economic gravity for a while now, shooting up sharply even though nearly a tenth of the available workforce has no work. Indeed, the S&P 500 has tacked on more than 50% since its March lows.

Cash for clunkers  
The rally has been especially kind to seemingly vulnerable stocks such as JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC). Both have pole-vaulted past the broader market on a year-to-date basis, despite their dim profitability prospects and exposure to the slings and arrows of a still outrageous financial sector. Toxic assets haven't evaporated, after all, and the feds are now scrutinizingBank of America's acquisition of Merrill Lynch for signs of criminality.

Meanwhile, high-quality businesses though they are, the stock prices of Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG) have enjoyed a similar, market-surpassing trajectory and now sport multiples that, to my cheapskate's eye, look fat and unhappy: Both trade at more than 30 times current earnings.

If the recovery isn't as robust as the market seems to think it's going to be, stocks like these that strike aggressive valuation profiles may take a hard hit. That's also true of Research In Motion (Nasdaq: RIMM), whose fortunes are tied to the economic cycle via exposure to business spending.

Value or value trap?
Meanwhile, at the other end of the valuation spectrum ....

Hewlett-Packard and Schlumberger (NYSE: SLB) may not appear as richly valued, but following substantial price pops on the year, are these companies values or value traps? In Hewlett's case, after all, dim growth prospects -- and its commodity-like business landscape -- haven't prevented its stock from having a 30% gain.

Schlumberger, on the other hand, literally isin a commodity business. After an increase of 45% so far in 2009, this company, too, seems priced for something close to perfection. And things aren't perfect!

Indeed, there's ample reason to believe that this recession may not be done with us yet.

Dialing for dollars  
Against that backdrop, one stock you may be surprised to learn I have my eye on during these strange days is  Sprint Nextel  (NYSE: S), which is up about 130% on a year-to-date basis.

Rocked hard amid the downturn, Sprint last paid a dividend in 2007, and it has posted negative net income during each of its past two fiscal years. At a glance, the company looks similar to the stocks I "trash-talked" above. Yet one Fool's trash is another's treasure -- and Sprint looks like a diamond in the rough to yours truly.

At some level, after all, even flailing companies can make attractive investment prospects. Sprint isn't exactly flailing: It raked in more than $35 billion in revenue during fiscal 2008, netting out a gross profit of nearly $19 billion, and the company has been free-cash-flow (FCF) positive during eight of the last nine years. The sole miss occurred way back in 2001, and the past 12 months have seen a sharp FCF increase compared with 2008. Continued...