Is the Stock Market Overpriced? Yes -- but Not These 3 Sectors

Is the stock market overpriced? Consider that the historical price-to-earnings (P/E) ratio for the S&P 500 over the past 146 years is 15.6. The current earnings multiple is over 25.5 -- more than 63% higher than its historical average value. 

The problem with using valuation metrics that look in the rearview mirror, though, is that the future is more important than the past for stock market performance. However, even using forward earnings multiples, the S&P 500 is still valued more highly than it has been in the last 13 years. The bottom line is that the stock market, at least as represented by 500 of the largest companies in the world, is overpriced. Sooner or later, there will be a reversion to the mean.

But not every sector in the market is overpriced. One sector is priced very close to its historic average. And, believe it or not, two sectors are actually trading at discounts to their historical averages. Here are these three sectors -- along with promising stock picks for each one.

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Source: Fool.com