For investors, 2019 was the sort of year that dreams are made of. When the curtain finally closed, the benchmark S&P 500 had gained nearly 32%, inclusive of dividends paid, which is well over four times the historic average annual return of the index of 7%, inclusive of dividends and when adjusted for inflation.

Perhaps best of all, the good times have continued, with the S&P 500 hitting multiple new highs since 2020 began, including surpassing 3,300 for the first time ever.

But as the market has chugged ever higher, valuations for a number of popular stocks and industries have become extended. For example, the Shiller price-to-earnings ratio (i.e., the P/E ratio based on average inflation-adjusted earnings from the previous 10 years) is at its third-highest reading ever (31.83). The only other times the Shiller P/E has even topped 30 are just before the Great Depression, prior to the dot-com bubble, and prior to the fourth-quarter swoon in the market in 2018.

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Image source: Getty Images.

Surprise! These industries are cheaper than they've been in a really long time

Yet you might be surprised to learn that despite the stock market hitting new highs with regularity and stretching valuation boundaries, a number of industries are at or very near their lowest forward P/E ratios, dating back more than two decades.

The following six S&P 500 industries, listed in no particular order, should all be considered historically cheap:

  • Automobile manufacturers: Forward P/E of 7.0
  • Broadcasting: 8.3
  • Biotechnology: 11.9
  • Drug retail: 9.4
  • Healthcare services: 11.2
  • Diversified chemicals: 9.6

What do I mean when I say these industries are "historically cheap"? Utilizing data provided by market analytics company Yardeni Research of S&P 500 sectors and industries, here's a quick tidbit regarding each forward P/E and how it relates, historically:

  • Automobile manufacturers: Right on par with its lowest reading over the past decade.
  • Broadcasting: A stone's throw away from its lowest forward P/E since 2009.
  • Biotechnology: Just above its lowest forward P/E since at least 1997.
  • Drug retail: Very small bounce from its lowest forward P/E since at least 1997.
  • Healthcare services: Slightly above its lowest P/E since at least 1997.
  • Diversified chemicals: Recently moved off of its lowest forward P/E since at least 1997.

In other words, there could be value to be had in these industries if you're willing to do some digging.

A CVS pharmacist assisting an elderly consumer with her shopping.

Image source: CVS Health.

If you want value, take a gander at these stocks

While the aforementioned six industries have more than enough companies to keep value investors busy for days, here are three value stocks that truly fit the bill as historically cheap.

CVS Health

To begin with, CVS Health (NYSE:CVS), in the drug retail space, has a forward P/E of 10.6, which is roughly 20% lower than its five-year average. Its price-to-cash-flow ratio is also about 25% below its five-year average.

CVS Health was clobbered between 2015 and early 2019 over concerns of generic-drug pricing weakness, lower insurer reimbursements, the potential for stout competition from existing drugstore rivals, and the possibility of Amazon making a grand entrance. While some of these issues have slowed CVS Health's top-line growth for its higher-margin pharmacy operations, it's not exactly been the disaster that Wall Street expected it to be.

CVS Health acquired health insurer Aetna in November 2018 in a move that'll likely boost CVS' organic growth rate as well as help the company keep Aetna's tens of millions of members within its ecosystem. Aside from boosting top-line sales, this combination is also expected to result in substantive cost-savings via synergies. With CVS also planning to open up 1,500 HealthHUB health clinics nationwide by the end of 2021, it's clear that this drugstore giant's reach is growing, not slowing.

Two smiling siblings lying on the floor and watching television, with their parents seated on the couch in the background.

Image source: Getty Images.

Sinclair Broadcast Group

In the television broadcasting space, few companies are as inexpensive as mid-cap Sinclair Broadcasting Group (NASDAQ:SBGI). Sinclair's forward P/E of 9 is noticeably lower than its five-year average forward P/E of 14, while its book value is half that of its five-year average.

At a time when streaming services seem to be taking over, you might assume that television station operators are trading at a discount for a reason. But this is a special year for Sinclair. You see, no television station operator has greater exposure to political ad revenue than Sinclair. In the third quarter of 2018, midterm ad spending soared 60% from the same period during the 2014 midterms, and the presence of billionaires Donald Trump (Republican) and Michael Bloomberg (Democrat) ensure another year of top-notch spending for the presidential race.

Furthermore, Sinclair closed on a $9.6 billion deal in August to buy 21 regional sports networks from Walt Disney. This purchase bolsters Sinclair's portfolio to include coverage of 42 professional sports teams, including more than half of all National Basketball Association (NBA) teams. Sinclair certainly looks to be trading at a discount following a 2019 summer swoon.

A biotech lab researcher using a multi-pipette tool to fill multiple test tubes.

Image source: Getty Images.

Alexion Pharmaceuticals

Biotech stock Alexion Pharmaceuticals (NASDAQ:ALXN) is also, arguably, dirt cheap, with a forward P/E ratio of 9.5 and a five-year average forward P/E of 20.2. Alexion's PEG ratio of 0.54 is not only indicative of incredible value, but it's less than half its five-year average.

The reason this rare-disease drug developer has received little love has to do with concerns over future competition for its blockbuster medication Soliris and worries about drug-pricing reform. The latter, of course, always seems to be a worry but never materializes into anything due to Capitol Hill being so politically divided.

Meanwhile, the former concern, Soliris' eventual demise, has been largely put to bed with the U.S. Food and Drug Administration's approval of Ultomiris. Whereas Soliris needs to be administered every two weeks, Ultomiris is only administered every eight weeks. That's because Ultomiris is a protein that's recycled within a patient's body for weeks and given in a higher dose than Soliris.

Long story short, with Alexion's core indications protected by another novel therapy and Congress unlikely to pressure drugmakers on price anytime soon, this stock is looking like a serious value.