When I call out the market's naysayers, it's important to note that I'm one of them. Just yesterday, I wrote that it's unlikely that even a good earnings season would give reason to believe that stocks are cheap at current levels.

To be sure, the global economy may be on firmer footing than it was, but it's far from what anyone would call booming, especially in countries like the U.S. And as I noted yesterday, the S&P 500's price-to-earnings ratio based on expected 2010 as-reported earnings is over 25, which is hard to call a bargain.

But in the stock market there's a buyer for every seller, and so there's two sides to every story, including this one.

Can earnings play catch-up?
In the P/E number noted above, it's important to note the phrase "as reported." This basically means the bottom line of the bottom line -- earnings after supposed one-time items like restructuring costs and goodwill writedowns. But the good folks at Standard & Poor's also provide estimates for operating earnings, which, as you might guess, are earnings before all of those one-time items.

For 2010, the gap between the estimates for operating earnings and as-reported earnings is huge -- 65% to be exact. In other words, the analysts at S&P think that one-off charges will continue to drag down earnings in 2010 despite solid underlying business earnings.

We've seen this kind of gap open up in the past. Over the past couple of decades, as-reported earnings have fallen noticeably short of operating earnings in periods like 1991 and 2001 -- the two most recent recessions. In both cases, the gap between the two numbers grew through the recession. Then, as recession swung to expansion, as-reported earnings grew quickly and closed the gap. As we exit the current recession, we could very well be in line for a similar catch-up phase as as-reported earnings climb to meet operating earnings.

And the gap between the two numbers is hardly academic. The S&P 500's 2010 P/E based on as-reported earnings is 25, while operating earnings yield a P/E of just 15.

To scoff or not to scoff
The bearish response to such an argument would most likely be that analysts are off their rockers when it comes to 2010 predictions. But are they? Let's take a look at some of the biggest expected jumps in 2010 earnings among the S&P's largest components.

Company

Earnings-Per-Share Growth
2009 to 2010

ExxonMobil (NYSE:XOM)

48%

Apple (NASDAQ:AAPL)

33%

JPMorgan Chase (NYSE:JPM)

48%

Chevron (NYSE:CVX)

49%

Bank of America (NYSE:BAC)

NM

Source: Capital IQ, a Standard & Poor's Company.
NM = not meaningful. Bank of America earnings per share are expected to rise from a 2009 loss of $0.17 to a 2010 profit of $0.93.

Apple is obviously a special case here, as it's been a juggernaut of a secular growth story. Whether the company can continue to deliver the kind of stellar growth that it has over the past few years could be up for discussion.

The rest of this list, on the other hand, will benefit from cyclical upswings, the kind of swings that can lead to rapid year-over-year growth.

For Exxon and Chevron, the price of oil is a major driver of the bottom line. For the first half of 2009, these companies had to deal with crude prices that ranged between the low $30s and the low $60s. Today, that price is back over $80. Is it any wonder that analysts expect these companies to report significantly better 2010 earnings?

And we've heard more than enough about the banks to know the situation there. After a hellacious period of massive writedowns from poor investments, it's looking hopeful that major banks will start reporting solid profits again.

All in all, the prospect of earnings' catching up to current stock prices may not be that ludicrous.

Still not quite airtight
While this may poke holes in the idea that stocks are already overpriced, it doesn't kill the concern altogether.

Though we can put together a case to defend estimates for next year, that case depends a lot on the economy, whether banks are truly recovering, and if the price of oil really can stay put.

Furthermore, broader measures of the market's valuation, such as the 10-year average P/E maintained by Robert Shiller, don't paint quite as rosy a picture. The P/E measure that he tracks -- which would be little affected by a single year's earnings -- is currently at 20.8 as compared with a long-term average of 16.4.

If you ask me, I think the best bet for investors with the time and interest to do some research is to shy away from broad indexes -- particularly in the U.S. -- and look for individual opportunities, like Intel (NASDAQ:INTC) and PepsiCo (NYSE:PEP), that have solid businesses and good growth prospects, pay their shareholders through dividends, and are still trading at reasonable valuations.

But I want to know what you think. Log your vote in the poll below, and then scroll down to the comments section to back up your call.

Intel is a Motley Fool Inside Value pick. Apple is a Motley Fool Stock Advisor recommendation. PepsiCo is a Motley Fool Income Investor selection. Motley Fool Options has recommended buying calls on Intel. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Matt Koppenheffer owns shares of Bank of America and Intel, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...