The S&P 500 has surged an eye-opening 38% since the March 9 low. However, the market still remains nearly 40% below its peak of 1,565 on the S&P and 14,164 on the Dow when the last bull market topped out in October 2007.

With such a sizable margin remaining between current market levels and the market top, certain stocks are still on sale. Though, as target price levels on some stocks have been blown through in the recent run, it's important to pick winners that are still undervalued.

With so many names, what will you buy? To jump-start your search, I put the Motley Fool's CAPS stock screener to work to find good, undervalued companies, like Agrium (NYSE:AGU) and Dawson Geophysical (NYSE:DWSN), which have sold off as the global recession took hold and demand for commodities dropped off a cliff. Agrium, a Canadian fertilizer company, is selling for a trailing price-to-earnings multiple of around six. That's down from the 24 P/E it was at when the stock was selling for more than $110 per share last June.

Dawson, which uses seismic data methods to locate subsurface oil and gas, currently sells for a price-to-earnings ratio of 6.7, compared with 27 at the height of its price performance in September 2007.

To find great values, I focused my screen on these metrics:

  • Price-to-earnings multiples of 15 or less.
  • Price-to-sales multiples of 5 or less.
  • Price-to-book multiples of 2 or less.             

In addition to finding companies that are downright cheap, I wanted to ensure that my screen returned quality stocks. Therefore, I also limited my search to companies with:

  • Five-star ratings, the highest possible, from our CAPS community.
  • A current ratio of 1 or greater, to ensure the companies are sufficiently liquid.
  • Return on equity of 15% or greater, to ensure efficiency.            

Rerun that screen here, if you like. Just remember that it will change as the market does. Below are some companies I pulled from the scan for further examination:

Company

Price-to-Earnings (TTM)

Price-to-Book (TTM)

Return on Equity (TTM)

Agrium

6.0

1.90

32.2

ATP Oil & Gas (NASDAQ:ATPG)

4.2

0.99

24.3

BP (NYSE:BP)

7.8

1.77

23.2

Dawson Geophysical

6.7

1.10

16.4

Diana Shipping (NYSE:DSX)

6.1

1.76

28.6

Endo Pharmaceuticals (NASDAQ:ENDP)

8.2

1.55

19.3

Royal Dutch Shell (NYSE:RDS-A)

6.5

1.33

20.6

Source: CAPS. TTM = trailing 12 months.

These are strong businesses that have probably just felt the wrath of the global recession. Once the economy gains solid footing, chances are, profit margins and stock prices will climb. However, don't simply take my word for it. Use the CAPS screener as a starting place for your stock research. Then, dig deeper and do your own due diligence to see if these stocks are right for your portfolio.

Start your search now at Motley Fool CAPS, because a sell-off of this magnitude may not be seen again for another 50 years.

Further Foolishness:

Fool contributor Jennifer Schonberger does not own shares of any of the companies mentioned in this article. Dawson Geophysical is a Motley Fool Hidden Gems selection. The Motley Fool has a disclosure policy.