5 Stocks That Are Cheaper Than You Think

Don't let growth stocks with their beefy trailing P/E ratios scare you away.

There are plenty of investments that may seem expensive based on last year's profitability, but trade at surprisingly low forward multiples relative to their growth rates.

Let's take a closer look at five stocks that may seem to be outrageously priced today, but are actually bargains if we look out to 2012 and beyond.

Source: Yahoo! Finance.

Valuation is only a number
Many of these multiples -- even those clocking in for next year -- are chunky. You don't often hear something along the lines of "this stock is so cheap that it's trading for a mere 32 times next year's projected profitability."

Then again, there is more to this basket of presumably pricey stocks than meets the cynical eye.

Ctrip operates China's leading online travel site. Obviously China's 1.3 billion residents aren't all traveling -- much less booking their vacations online -- but we're still early in both the country's online migration and the emerging economy that will give more people the financial means to travel.

Wireless chip giant Qualcomm continues to thrive in the smartphone world we live in. Qualcomm dominates the application processor and cellular baseband markets, and its patent-rich ways provide steady revenue and make it a compelling buyout target. Despite all of these positives, Qualcomm's trading at a forward multiple in the mid-teens.

Netflix is a great example of a stock that is cheaper than the metrics suggest. The video rental giant doesn't seem cheap at 47 times this year's projected profitability and 32 times next year's target, but the pros see Netflix growing its bottom line by 57% this year and 48% come 2012. In other words, it's actually trading at a discount to its P/E. If things go well during next month's risky subscription plan hike for couch potatoes on dual plans, Wall Street's estimates will go even higher -- and Netflix's forward P/E will go even lower.

A year ago, E*TRADE didn't even have a trailing earnings multiple. The Web-savvy discount broker was losing money, and its banking side was bearing the brunt of the subprime crisis. The discounter has turned its fate around, and is now a compelling buyout candidate. Being a discount broker isn't easy these days. Competitive commission schedules, a lack of trading, and the need to match rivals in offering commission-free ETFs are eating into margins. However, the pros still see E*TRADE continuing to make major strides on the bottom line.

Finally, we have Activision Blizzard. The traditional video game industry has been largely in a rut since 2009, but the leading software maker continues to hold up well with its Call of Duty and World of Warcraft juggernauts. Activision Blizzard is also making headway in the booming digital market, something that it hopes investors remember when Zynga finally goes public at what should be a ludicrous valuation.

Adding it up
None of these stocks are immune to a market meltdown. If you're looking for bulwarks, you'll have to find them somewhere else.

These investments are largely high-beta growth stocks, and will likely remain that way for several more years. The key here, though, is that they aren't as expensive as pundits make them out to be.

It's the opportunity that you didn't know that you were waiting for.