The best opportunity in a decade?

I know, the headline sounds outrageous. Considering that China's growth is slowing, that the U.S. recovery is stalling, and that the EU is constantly under financial fire, there doesn't seem to be a plethora of opportunities out there.  

After a spectacular rally in 2009, the S&P 500 has dropped by about 5% so far this year. Almost no sector or asset class has been spared. But trust me: Keep reading, and I'll give you five stocks in one specific sector that are trading at dirt cheap prices.

Collateral damage
One very important aspect of the stock market's decline this year is the grave collateral damage. Certain events can shake the foundation of an entire sector, as we've seen with the BP oil disaster. For instance, take a look at ATP Oil & Gas (Nasdaq: ATPG). This small-time oil and gas developer has derived much of its revenue from the Gulf of Mexico and has about 68% of its reserves locked up in the Gulf.

Because of a possible drilling moratorium and the expectation that oil exploration will be more heavily regulated, ATP has taken a dramatic beating in the market. It's down a whopping 50% this year. However, is that really appropriate? ATP still has about 32% of its reserves in the North Sea, and although it is a high-risk, high-reward investment, the company has enormous upside.

Similarly, dry bulk shipper DryShips (Nasdaq: DRYS) has fallen by 38% this year. Because it's a Greek company (although its revenues are totally diversified) and because the Baltic Dry Index has been pummeled, Dryships seems more like a victim of the market than an actual candidate for a massive sell-off. In fact, last quarter, both revenues and net income climbed higher, and the company continues to perform quite well considering how drastically dayrates have fallen.

Look no further than tech titans
Sift long enough through the carnage of battered stocks, though, and you'll find one asset class that is trading ridiculously low, and for very dubious reasons. Look no further than your average technology stock.

According to Bloomberg, tech stocks have slumped to their lowest valuations in two decades. Currently, tech stocks in the S&P 500 are trading at 15 times this year's earnings and 13.4 times next year's earnings. For a sector that is known for high growth and even higher valuations, this is quite impressive. It's even more impressive when you consider that income at tech companies is expected to rise by 42% this year. Compare that with the 34% increase expected for the general market, and you've got yourself an opportunity to invest in some of the best growth companies around at extraordinarily reasonable prices.

Furthermore, tech companies are sitting on record amounts of cash, which will benefit them should they choose to go on a shopping spree of if they just want to hunker down for a double-dip recession. Below, I've taken a look at the five largest technology stocks by market cap and evaluated their attractiveness using a variety of metrics.

Company

Price Change (YTD)

Forward P/E Ratio

Cash/Debt

Apple (Nasdaq: AAPL)

16.5%

14.8

$23B / $0

Microsoft (Nasdaq: MSFT)

(16.5%)

10.9

$37B / $6B

IBM (NYSE: IBM)

0.1%

10.6

$14B / $26B

Google (Nasdaq: GOOG)

(24.8%)

14.9

$30B / $0

Cisco Systems (Nasdaq: CSCO)

(5.1%)

12.7

$39B / $15B

Source: Yahoo! Finance. YTD = year to date. P/E = price-to-earnings.

Sure, there are valid reasons why these stocks may be down. With the EU crippled and U.S. businesses not spending a ton of money, the companies listed above could definitely see a decrease in technology purchases. The top line could be cramped for the short term as small and medium-sized enterprises try to rein in spending.

However, Apple, Microsoft, IBM, Google, and Cisco are all trading for quite a bit less than their five-year average price multiples. With the exception of IBM, they are all sitting on boatloads of cash with minimal or zero debt, giving them a great competitive advantage should stocks become so cheap that it only makes sense to pursue tactical acquisitions.

And it's not like they haven't performed well this year. IBM, for instance, is on pace to achieve record earnings and operating margins in 2010. My foolish colleague Alex Dumortier thinks Big Blue is one of the most remarkably mispriced names in the market. Google reported quarterly results last Friday, and despite spending big bucks on overhead and hiring nearly 1,200 new employees, it still managed to boost earnings, while revenues grew by an awesome 23%.

The Foolish bottom line
If you look back at history, data will show that during downturns you can often find stocks that are trading at wildly low valuations. Sometimes it's small caps, as they tend to be pretty volatile; other times it is a specific sector that has gotten hit for good reason (like energy stocks right now). However, it's pretty rare that multibillion-dollar companies with huge economic moats, tons of cash, and a history of outperformance -- like the ones listed above -- are trading for such appealing prices.

If you're in the market for the long haul, then investing in a company like Google or Cisco at today's prices could be the best opportunity in a decade. I suggest you get in while there's still time.

Don't think these five stocks are cheap enough for you to invest in? Let me know it in the comments section below!

Jordan DiPietro owns shares of ATP Oil & Gas. Apple is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Microsoft, which is a Motley Fool Inside Value choice. The Fool owns shares of Google, which is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.