Broadly speaking, stocks were a fine investment in 2010. True, the market lagged the jaw-dropping returns to be found in, say, gold, which jumped about 25%, or silver, up 75%. But the S&P 500 ($INDU) is set to close 2010 with a 13% gain -- something that was almost unthinkable as recently as September -- and we'd gladly take returns like those again in 2011.Wall Street's average price target on the S&P 500 has it tacking on another 11% over the next 12 months, according to Bloomberg data -- with plenty of ups and downs along the way, naturally. That has us inclined to play defense in our 2011 stocks picks, with an eye toward bargain stocks paying generous, sustainable dividends.
We screened the S&P 500 for stocks trading at deep discounts to the index by forward earnings, currently at 14.6, according to market research firm Birinyi Associates. We also looked for price/earnings-to-growth (PEG) ratios well below the S&P 500's figure of 1.6, according to data from Thomson Reuters. (PEG reveals how how a stock is valued relative to its growth prospects. (more)
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