Fresh all-time highs from various indexes along with bullish commentators attempting to one-up each other with higher and higher price targets might have more cautious investors wondering where the bargains are.

If an investor is going to risk principal on an equity stake in a business, it is highly beneficial to value the company based on the full business cycle, including recessions. Looking at gauges of full-cycle and forward earnings estimates uncovers a wide range of valuations, from extremely undervalued and defensive to significantly over-valued and cyclical. This is a marked difference from the across-the-board lofty valuations of 2007, and reminiscent of the disparity value investors exploited to great success in 2000 and 2001.

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