Highest P/Es for Commodity Companies Hide Bargains

Commodity companies, the most- expensive stocks in the Standard & Poor’s 500 Index, are turning into relative bargains.

While investors are paying an average 33.1 times earnings this year for copper, plastic and seed producers, the premium drops to 17.7 based on 2010 analyst estimates that call for profits to almost double, data compiled by Bloomberg show. The decline in the price-earnings ratio is the steepest for any group in the S&P 500 and would leave the companies 23 percent less expensive than their historical average of 23.2 times.

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