While most investors are fretting the markets recent contraction, you can be quite confident that "my pal Warren" has a smile on his face, as does Peter Lynch, Ken Heebner, Bill Miller, Bruce Berkowitz, and any number of fellow value investors that know now may be a time of opportunity. That is because they have the experience and understanding to pounce when they have a chance to buy things cheap.

This is the fourth installment of my series to discover just that: cheap stocks. If you would like to get on board from the beginning then review the initial post which screened for stocks with lower than market average P/E ratios, see Serious Money: Market Looks Cheap to Me -- 35 Stocks. In the second installment, I looked at yield and PEG ratios: Serious Money: Still Cheap Market -- 35 Stocks + Yields & Growth. Then I moved on to the the P/S and P/CF metrics in Serious Money: Cheapest Stocks Yet -- From 35 to 26, cutting nine stocks.

Is the market overpriced? Maybe it is cheap, or perhaps it is fairly valued. This is the third in a series examining the issue. Still, it has been my contention that it does not make any difference because no matter how the market is valued as a whole, there are plenty of cheap stocks out there to accommodate a large amount of capital allocation even this deep into a bull run.

If you would like to follow along from the beginning, the initial post screened stocks for lower than market average P/E ratios: Serious Money: Market Looks Cheap to Me -- 35 Stocks. In the second installment, I looked at yield and PEG ratios: Serious Money: Still Cheap Market -- 35 Stocks + Yields & Growth.

Let's try and reduce the gambling by examining the facts and ignoring what the bulls and bears are chatting up at the moment. We started the process by screening for lower than market average P/E ratios, see: Serious Money: Market Looks Cheap to Me -- 35 Stocks.

Two more important criteria influence today's review: the yield, a favorite of "my pal Warren"; and the price-to-earnings-to-growth (PEG) a focus of Peter Lynch, the retired fund manager extraordinaire of Fidelity's Magellan Fund.

We frequently receive comments that the market is overpriced. Recently one of our active readers commented that the market P/E was 30, which it's not. The actual rate (S&P forecast) has been even higher at times due to the volatile market.

The average should trend closer to the long term P/E of 15.7 in the next few years. However, I have reviewed companies often covered on our site and come up with a list of 35 stocks that have price-to-earning ratios below the long-term average already. I think there are dozens of bargains regardless of the status of the overall market.

The U.S. recession, the worst in more than 25 years, has hit the restaurant sector hard: it's left a trail of bankrupt restaurant chains and broken business models.

But not Darden Restaurants (DRI), which will be a restaurant chain survivor, and that's a major reason I'm reiterating my buy rating for the company's shares, first recommended on June 25, 2009, at a price of $32.78.

Thanksgiving is a time when friends and family gather at home for a feast, but the restaurant industry is hoping that a good number of folks dine out amid their holiday shopping activities.

Given the tentative economic recovery and double-digit unemployment rate, it's doubtful that they'll get their wish. That's why our bearish pick is Darden Restaurants (DRI) -- the operator of Red Lobster, Olive Garden, The Capital Grille and LongHorn Steakhouse, to name a few.

Whether the market can keep pushing higher in 2010 despite our shaky economy is anyone's guess, but we hope that this rally has helped you recoup from some of the devastating losses most people experienced in 2008.

In the spirit of Thanksgiving, we want to give you six more reasons to be thankful this year. So we've put together a list six trades that should lead you to some very tasty profits in the near future.

Simply, Darden Restaurants Inc. (NYSE: DRI) will be a restaurant sector survivor, following the sector's restructuring amid the 'frugal consumer' trend, and that's why I'm Reiterating my Buy rating for DRI, first recommended on June 25, 2009 at a price of $32.78.

Darden's stock has meandered since the June, and its slight downtrend, combined with difficultly remaining above the key 50-day moving average, in normal times would have prompted a re-evaluation of the June Buy rating.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Accenture Ltd. (NYSE: ACN) lower Q4 earnings met analysts' expectations but the Q1 outlook was weak.
• Cal-Maine Foods Inc. (NASDAQ: CALM) posted a Q1 net loss and said it will skip its dividend this quarter.
• Cephalon Inc. (NASDAQ: CEPH) earnings prospects for 2010 resulted in an analyst's downgrade.
• Darden Restaurants Inc. (NYSE: DRI) Q1 earnings beat by a penny but revenue fell short of estimates.
• Gannett Inc. (NYSE: GCI) shares rose after it forecast Q3 earnings above Wall Street estimates.

Darden Restaurants (NYSE: DRI - option chain) stock traded lower Wednesday after the company, which includes Red Lobster and the Olive Garden, reported Q1 earnings Tuesday of $94.3 million. That is equal to 67 cents per share, which beat analysts' forecasts by a penny. However, Darden's net sales came in at $1.73 billion, missing analysts' forecasts of $1.78 billion by almost 3%. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on DRI.

DRI opened at $33.53 Wednesday. In morning trading the stock hit a high of $33.58 and a low of $32.51. As of 11:15, DRI was trading at $32.86, down $3.32 (-9.2%). The chart for DRI looks bearish and S&P gives DRI a negative 2 STARS (out of 5) sell ranking.

TheStreet.com's Jim Cramer says a good shakeout on Monday would prepare us for a "fulcrum day" on Tuesday.

Could have been worse. With Research In Motion (NASDAQ: RIMM) (Cramer's Take) never lifting -- which was, by the way, wrong after a certain point -- and oil not rallying, you had no place to go. Last week we lost tech, banks, and oil. You can't even go up with just two of them, so to lose all three was dreadful.

I said last week that the calendar just didn't favor the bulls. The propensity to want to lock in gains ahead of the last weekend in September -- the one that is ended by the Yom Kippur holiday, which will always have thin trading -- is just too great.

Plus, don't forget that every month that is supposed to be bad gets tons of play for being bad: October! Ooooooo, scary! You know that's going to happen again.

Autumn has arrived and the quarter winds down this week. The Dow has been inching toward 10,000 for a while now, though it closed lower in the past three sessions. Can it make it to 10,000 for the start of the third quarter? If so, what will push it higher? If not, what will drag it down further?

• Monday is Yom Kippur, the most solemn of the Jewish holidays; trading likely will be lighter than usual. In the evening, the FDIC meets to discuss how to rebuild the Bank Deposit Insurance Fund.
• Tuesday, the Consumer Confidence Index for September is due and the SEC holds a public meeting to consider more short sale actions.

Analyst upgrades:

• Citigroup upgraded Sunoco Logistics (NYSE: SXL) to Buy from Hold on valuation and raised its target on shares to $60 from $56.50. The firm sees better value in Sunoco Logistics than Enbridge Energy Partners (NYSE: EEP), which it downgraded to Hold.
  
• BofA/Merrill believes Raytheon (NYSE: RTN) offers the most potential upside in the larget cap defense sector. The firm upgraded shares to Buy from Neutral and has a $62 target on the stock.
  
• Roth Capital upgraded Nvidia (NASDAQ: NVDA) to Buy from Hold based on seasonality, multiple product cycles, and valuation. Roth's target remains $15.
• Oracle (NASDAQ: ORCL) was upgraded to Buy from Hold at Societe Generale.
  
• EnerNOC (NASDAQ: ENOC) was upgraded to Outperform from Neutral at RW Baird.
  
• American Express (NYSE: AXP) was upgraded to Neutral from Underweight at JP Morgan.
  

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Accenture Ltd. (NYSE: ACN) beat earnings expectations but revenue was hurt by currency effects.
• Bed Bath & Beyond Inc. (NASDAQ: BBBY) strong Q1 results beat estimates but same-store sales fell.
• CKE Restaurants Inc. (NYSE: CKR) lower Q1 earnings and strong sales both topped expectations.
• ConAgra Foods Inc. (NYSE: CAG) higher Q4 earnings were in line with expectations, and shares slipped.
• Darden Restaurants Inc. (NYSE: DRI) Q4 results were higher, but it warned of continuing challenges.
• Hennes & Mauritz (OTC: HMRZF) reported strong Q2 numbers, though same-stores sales slipped.

The U.S. restaurant sector certainly has taken it on the chin as a result of the recession, which has shifted Americans into "frugal consumer" mode.

In general, analysts are understandably bearish on the sector, and so am I, but there are exceptions, and Darden Restaurants (NYSE: DRI) is one. Darden's shares have pulled-back $10 recently to roughly $33 and that sets up a decent entry point. Here's why: