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.

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

• Advanced Micro Devices Inc. (AMD) shares declined despite an earnings beat and a positive outlook
• Bank of America Corp. (BAC) reported that its Q4 loss widened more than expected by Wall Street.
• Capital One Financial Corp. (COF) reported better-than-expected earnings but shares declined.
• Colgate-Palmolive Co. (CL) is seen as on-track to record double-digit earnings growth in 2010.
• Cree Inc. (CREE) strong earnings and revenue growth sent shares to a new 52-week high.

It's been a busy week in the equities market. Earnings reports are coming fast and furious. I thought I would catch up on a few companies with a brief look at their numbers.

First up is an entity from the consumer products sector. Kimberly-Clark (KMB), a colleague of Procter & Gamble (PG), issued fourth-quarter data on Friday. Sales increased over 8%, with a better currency environment helping things out. Organic sales powered up almost 3%, driven in part by higher prices. Per-share profit went up over 15% to $1.17.

Procter & Gamble (PG), whose related companies include Johnson & Johnson (JNJ) and Kimberly-Clark (KMB), is yet another stock close to a 52-week high. Is it too high to buy, or is it likely to be a prudent defensive holding for 2010?

P&G's price action is pretty interesting. Even though it's near a 52-week high, it's actually flat on the year-to-date frame in terms of performance. That doesn't include dividend payments, of course, but nevertheless, there have been so many other stocks that have bounced off the March lows and delivered serious price appreciation superior to what P&G has been able to accomplish. This is one argument for the stock, since you might not have to worry about it being overbought relative to other equities.

Kimberly-Clark's (KMB) stock continues the long, slow walk up, hence it goes without saying that I'm reiterating my buy rating for the company's shares, first recommended on June 22, 2009 at a price of $51.06. If you bought KMB in June, you're up about 25%.

Kimberly posted Q3 EPS of $1.40, or well above the $1.13 First Call Q3 EPS estimate. And you know the drill: look for 'MOTS' -- as in 'more of the same' in Q4, where the First Call estimate is $1.25. For 2009, revenue will come in down 2% to flat, with a 5-7% gain seen in 2010, led by stronger growth in emerging markets.

Analyst Upgrades

• Citigroup upgraded 3M Company (MMM) to buy from hold on expectations the company will deliver superior financial returns over the next 9 to 12 months and on valuation. The firm raised its target on shares to $92 from $84.
• Deutsche Bank upgraded CA Inc. (CA) to buy from hold as it believes cloud computing could accelerate the company's growth over the next 2 to 3 years. The firm raised its target on shares to $28 from $22.
• Wells Fargo upgraded Cooper Companies (COO) to outperform from market perform as it believes that the company has largely eliminated its execution risks while its new products should enable it to grow more quickly than the market.
• BioMarin (BMRN) was upgraded to buy from hold at Collins Stewart.
• Liquidity Services (LQDT) was upgraded to outperform from perform at Oppenheimer.
• RealNetworks (RNWK) was upgraded to neutral from underweight at JPMorgan.

The rest of the world is going to help U.S. consumer product manufacturers next year. Look for international growth to push the likes of Colgate-Palmolive (CL), Avon (AVP) and Clorox (CLX) higher in 2010, according to Fitch Ratings. In an interview with Reuters, a director gave the Fitch's outlook for consumer goods.

The household and personal care segments increased revenue every year from 2003 to 2008. So, 2009 was but a bump in the road. Even in a recession, you need toilet paper and shampoo, so expect the spending to come back.

TheStreet.com's Jim Cramer says you can be bearish, but you have to admit when you're wrong.

Oh boy, I hit a nerve. My last two days of donning the bear suit and imitating the bears has brought on a cacophony of critics, all of whom think that I am attacking them personally! That's right, they think I have read them, seen them and heard them and that I am spoofing them or making fun of them.

Moreover, they think that I am wildly bullish and that I am mocking them for not wanting to buy things here.

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

• AirTran Holdings Inc. (NYSE: AAI) reported its third consecutive quarterly profit and will increase capacity.
• Amazon.com Inc. (NASDAQ: AMZN) shares soared after it reported very strong Q3 numbers.
• Apple Inc. (NASDAQ: AAPL) reported stellar Q4 results, driven by the popularity of Macs and iPhones.
• BlackRock Inc. (NYSE: BLK) Q3 earnings soared, due in part to a tax benefit, and assets managed grew.
• Broadcom Corp. (NASDAQ: BRCM) revenue surged sequentially but note the would be flat going forward.
• Caterpillar Inc. (NYSE: CAT) beat Q3 earnings expectations and shares rose though revenue slumped.

Kimberly-Clark Corporation (NYSE: KMB), a consumer products entity whose colleagues include Procter & Gamble (NYSE: PG) and Johnson & Johnson (NYSE: JNJ), is up today on third-quarter results. At the time of this writing, my screen was showing shares of Kimberly-Clark higher by a little under 6%.

According to the corporate press release, sales declined 1.7%. Not a great start, but Kimberly-Clark highlighted a better metric: organic sales increased 3%, helped along by price increases. Luckily, sales volume didn't fare too badly; they were essentially flat.

A global economy on the mend means better days are ahead for Kimberly-Clark Corp. (NYSE: KMB), hence I'm reiterating my Buy rating for the company, first recommended on June 22, 2009 at a price of $51.06. If you bought KMB's shares then, you're up about 16%.

Evidence is mounting that the global economy, particularly in emerging markets, is starting to gain traction, and global consumer products giant Kimberly, with a presence in more than 150 countries, is poised to benefit. Institutional Investors have sensed this, and have bid-up KMB's shares since March.

TheStreet.com's Jim Cramer says the spike in stock prices warrants no buying until prices go lower.

I read a scary book this weekend: the S&P chart book. It was frightening because there weren't more than a handful charts that aren't overextended, and many stocks have reached levels that I didn't like when their companies were doing well. Chart after chart in every business, but especially retail and industrial, have moved up so much that you have to feel like a chump to come in at these levels.

There are almost no stocks with growth prospects that have accidentally high yields anymore. Kimberly-Clark (NYSE: KMB) (Cramer's Take) and Paychex (NASDAQ: PAYX) (Cramer's Take) were the only two that I saw that seemed remotely appealing, and maybe Philip Morris (NYSE: PM) (Cramer's Take).