In the 10 major U.S. market contractions since 1949, the Standard & Poor's 500 Index price-to-earnings ratio has never been as low as it is now, reports Bloomberg.

In fact, since the Reagan presidency in 1981, investors have never paid less for equities. "The last time stocks in the index were cheaper on average during a recession was the early 1980s, a decade when the index surged 227 percent, or 403 percent including reinvested dividends."

There are several reasons for this discounted market. According to Bloomberg, "Bears" are of the opinion that low interest rates will keep the U.S. in the economic slowdown that began in 2007. "Bulls" suggest the P/E ratios are low due to "indiscriminate selling" by investors who fear a repeat of the 2008 credit crisis.

Either way, Europe's debt crisis and the U.S. downgrade to an unthinkable AA+ credit rating has sparked a $2.3 trillion drop in market value.

Most analysts, uncertain of the near future, seem confident that a recovery, albeit a sluggish one, is imminent. To demonstrate their claims, they point to increasing corporate earnings, small boosts in consumer spending, and anticipated per-share profit and economic growth.

The future of the market remains uncertain, yet investors who are bullish on America's future see opportunity in the current financial climate. After all, low P/Es can mean big opportunities for investors looking to buy in at a discount.

Interested in discounted stocks? To help you start your search, we put together a list of companies trading on the U.S. stock market with low PEGs (below 1) and price to free cash flow ratios (P/FCF) under 10 -- both signals that that stock is undervalued.

To refine our search, we looked for the names experiencing positive levels of insider buying -- a bullish signal that insiders think the company is undervalued and has good future prospects.

Do you think now is a good time to buy these potentially undervalued stocks?

List sorted by insider buying. (Click here to access free, interactive tools to analyze these companies.)

1. American International Group (NYSE: AIG): Property & Casualty Insurance Industry. Market cap of $44.15B. PEG at 0.31, P/FCF at 10.0. Net insider shares purchased over the current quarter at 6.98M, which is 3.06% of the company's 228.44M share float. The stock has performed poorly over the last month, losing 19.63%.

2. Dell (Nasdaq: DELL): Personal Computers Industry. Market cap of $26.80B. PEG at 0.93, P/FCF at 5.72. Net insider shares purchased over the current quarter at 17.23M, which is 1.08% of the company's 1.59B share float. The stock has performed poorly over the last month, losing 11.29%.

3. AOL (NYSE: AOL): Internet Information Providers Industry. Market cap of $1.54B. PEG at 0.59, P/FCF at 5.51. Net insider shares purchased over the current quarter at 490.0K, which is 0.47% of the company's 105.24M share float. The stock is a short squeeze candidate, with a short float at 14.06% (equivalent to 6.19 days of average volume). The stock has had a couple of great days, gaining 17.81% over the last week.

4. Mercer International (Nasdaq: MERC): Paper & Paper Products Industry. Market cap of $390.47M. PEG at 0.54, P/FCF at 1.85. Net insider shares purchased over the current quarter at 98.53K, which is 0.21% of the company's 45.87M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 3.21). The stock has had a couple of great days, gaining 7.13% over the last week.

5. PH Glatfelter (NYSE: GLT): Paper & Paper Products Industry. Market cap of $629.56M. PEG at 0.94, P/FCF at 9.27. Net insider shares purchased over the current quarter at 31.0K, which is 0.07% of the company's 45.22M share float. The stock is a short squeeze candidate, with a short float at 7.98% (equivalent to 11.7 days of average volume). The stock has had a couple of great days, gaining 6.83% over the last week.

6. Kohlberg Kravis Roberts & Co. (NYSE: KKR): Asset Management Industry. Market cap of $8.27B. PEG at 0.47, P/FCF at 2.88. Net insider shares purchased over the current quarter at 77.40K, which is 0.04% of the company's 202.90M share float. The stock has had a couple of great days, gaining 9.3% over the last week. The stock has performed poorly over the last month, losing 17.56%.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Becca Lipman and Daniel Guttridge do not own any of the shares mentioned above. Insider Data sourced from Yahoo! Finance, all other data sourced from Finviz.