Is the market cheap? Well, the S&P 500 index is trading at a hair over 17 times trailing earnings as of the June-ended quarter. That doesn't look too bad, when you consider the average multiple between 1988 and 2008 was 23.

I happen to believe that we've spent much of the past two decades in an overvalued market, so I'm not sure that the comparison above is terribly meaningful. But that doesn't mean there aren't individual stocks that are trading at far more attractive multiples.

Of course, the key consideration for any investor playing supermarket sweep with cheap-looking stocks is why they're cheap. It's very rare that a stock trades at a bargain multiple without there being some reason investors are skittish. And it's only when you understand what that reason is that you can determine whether the stock is truly a bargain.

With that in mind, here are five stocks that I think investors have allowed to fall into bargain territory.

Chevron (NYSE: CVX)
If you ask me, there are a lot of bargains in the oil and gas sector right now. The 800-pound gorilla of the industry, ExxonMobil, trades at a none-too-expensive forward price-to-earnings ratio (P/E) of 10. ConocoPhillips (NYSE: COP) has a forward P/E of just 8.6 and pays a 4% dividend. So why do I single out Chevron? Its forward P/E of 8.8 is nearly as low as Conoco's, it has one of the best balance sheets among big oil players, and its current dividend and dividend history were enough to excite fellow Fools Todd Wenning and Bryan Hinmon.

So what's keeping the sector beaten down? There's still some hangover from BP's Gulf of Mexico disaster. Though BP finished permanently sealing the gusher, there's still plenty of uncertainty over what the longer-term impact will be on the industry. Investors may also still be haunted by being whipsawed by oil prices over the past few years.

These issues certainly aren't innocuous, particularly the former, but I don't think either is enough to justify the single-digit multiple on Chevron.

Transocean (NYSE: RIG)
As long as we're talking about oil and gas, let's turn to the largest company that focuses on drilling holes to get to those hydrocarbons. Transocean is right smack in the middle of the BP debacle, since it owned the Deepwater Horizon rig that was drilling the well.

There's little doubt that the fallout will have continued impact on Transocean. Even if the company does avoid big liability payouts, tighter regulations in the Gulf of Mexico will be a drag on business. However, Transocean is a huge company with rigs operating all over the world, and a major push into offshore drilling continues. If you need evidence of that last point, look no further than the $70 billion that Petrobras (NYSE: PBR) raised specifically to tap deepwater oil.

I generally prefer dividend-paying stocks, but with a forward P/E of just 8.5, Transocean is an intriguing stock with or without a dividend.

Eli Lilly (NYSE: LLY)
Getting back to a company that pays dividends, it's going to be no easy task for drug giant Eli Lilly in the coming years. As my fellow Fool Brian Orelli put it earlier this year, Lilly currently has "a patent cliff that makes the Grand Canyon look like a creek bed."

By the end of 2013, Lilly will lose patent protection on drugs that accounted for $11 billion of the company's $22 billion 2009 revenue. That's no joke. And while Lilly is most certainly hard at work trying to formulate new blockbusters, its recent approvals haven't been taking off in any serious way.

So why take a chance at all? For 2010, analysts expect the company to register $4.52 in earnings per share, putting the stock's P/E at just less than 8. Meanwhile, the company gushes cash and rakes in far more than it needs to pay its dividend. If we assume in a worst-case scenario that profits and cash flow are both halved, you're left with a stock that has a valuation that's still not particularly high, and the continued ability to pay a healthy dividend.

And it would seem there's room for significant upside above that worst case.

The Travelers Companies (NYSE: TRV)
For Travelers, investors may be a bit turned off by the projected drop in earnings for this year. After notching $6.33 in 2009 earnings per share, analysts see a 10%-plus drop by the time all is said and done in 2010. Combine that with the fact that the stock has basically flatlined over the past year, and investors may simply be letting it slide by.

But that could be a mistake. Though it's not particularly flashy, the company is solid, with a 13% return on equity over the past 12 months and a moderate 2.7% dividend, which the company has been growing. Even if earnings do drop to analysts' mark this year, the stock is still trading at a P/E below 10.

To me, Travelers smells like a potential sleeper.

Seagate (NYSE: STX)
I'll let Seagate round out the group since it takes the cake when it comes to being really beaten down. If analyst estimates for Seagate's fiscal 2011 -- which ends next June -- hold, then we're looking at a stock trading at around six times 2011 earnings. That's a Scrooge level of cheap.

The reason investors haven't been scrambling to scoop up shares at this level is because the hard disk drive industry -- which Seagate dominates along with just a few other major competitors -- looks like it will come under siege in the years ahead. With solid-state drives seemingly ready to start shoving aside traditional disk drives, investors are worried that holding shares of Seagate will be akin to holding shares of a buggy whip manufacturer just as Henry Ford hit the scene.

While I'm hardly bullish on the long-term prospects of hard disk drives, I do think there may be opportunity in the ultralow price of Seagate's stock.

Is there a low P/E stock that you think beats the stocks I've highlighted here? Head down to the comments section and let me know what it is.

I'm a sucker for a good dividend and these five stocks have dividends to get excited about.

Chevron and Petroleo Brasileiro are Motley Fool Income Investor picks. The Fool owns shares of ExxonMobil. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy

Fool contributor Matt Koppenhefferowns shares of Eli Lilly and BP, 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 @KoppTheFoolor on his RSS feed. The Fool's disclosure policyassures you no Wookiees were harmed in the making of this article.