So far, 2021 has been a bonanza for stock market investors. The S&P 500 has already surged 13% year-to-date and is now averaging an eye-watering valuation of 43 times earnings. That means it's trading at a significant premium compared to its historical P/E average of 16.

Those historically high valuations have some investors considering a switch to value stocks to lock in the gains. That makes now a good time to bet on value stocks like Bausch Health (BHC 0.16%) and Albertsons (ACI -0.54%), which trade at relatively affordable multiples compared to competitors. Let's dig deeper. 

1. Bausch Health 

Trading at 1.5 times sales and 6.6 times forward earnings, Bausch Health stock is more than discounted; it's distressed. Investors are still worried about the drugmaker's $24.2 billion debt load (compared to its $1.8 billion in cash). But Bausch looks poised to recover as management deleverages the company's balance sheet and unlocks value by divesting potentially undervalued assets.

Golden egg representing an investment nest egg.

Image source: Getty Images,

Fourth-quarter revenue was flat year over year at $2.2 billion as strength in international eyecare and the Salix gastrointestinal business helped offset weakness in the diversified products segment, which is facing losses of patent exclusivity and generic competition. Bausch generated a GAAP net loss of $153 million, but this number significantly understates its bottom-line performance on a cash basis.

Fourth-quarter adjusted EBITDA, which adds back amortization, depreciation, and other non-cash charges, stands at $911 million. This strong bottom line will help Bausch meet its debt obligations without relying on equity dilution. In the full-year 2020, the company paid down $900 million in debt using $1.1 billion in GAAP operating cash flow.

Bausch plans to pay down an additional $1 billion in debt in 2021, and potentially spin off its Bausch & Lomb eyecare segment into an independent public company. Bausch & Lomb might be worth more as a separate entity than as part of the Bausch Health rollup. And management believes this transaction would help the two businesses focus on their competitive advantages and unlock value for investors.

2. Albertsons 

With a price-to-earnings (P/E) multiple of 9.2, Albertsons is dirt-cheap, even for a supermarket retailer. The stock trades at a significant discount to similar companies like Walmart and Target, valued at P/Es of 26 and 24, respectively. Albertsons could experience upside because of its respectable growth rate and pivot to e-commerce. 

Fiscal 2020 revenue increased 11.5% year over year to $69.7 billion, powered by a 16.9% increase in identical (same-store) sales and a 258% surge in digital sales amid the coronavirus pandemic. Management expects growth to decelerate this year, projecting same-store sales to decline 6% to 7.5% for a two-year stacked growth rate of 9.4% to 10.9% between 2020 and 2021. 

But CEO Vivek Sankaran believes the trend toward online shopping will continue in the post-pandemic economy. He also notes that omnichannel customers are more profitable, with double the spend rate of shoppers who shop exclusively in-store. Last year, Albertsons invested $300 million to accelerate its digital transformation. This includes features like zero-touch compatibility and expanding its "Just for U" digital loyalty program, which now boasts 25.4 million members, up 20% from the previous year. 

Albertson currently pays a quarterly dividend of $0.10 per share, which gives it a yield of 2.2% ($0.40 per share) on an annual basis. 

Bang for your buck 

Albertsons and Bausch Health are great picks for investors who want bang for their buck in the stock market. Albertsons is ideal for investors who prefer to play it safe by betting on a mature, blue-chip company, while Bausch Health is a better pick for investors willing to tolerate more uncertainty for the potential for significant growth.