Where is the stock market headed in the coming weeks and months?

 

It's an interesting question, but a better one is, "where are the values right now?" And this week, a number of the investing gurus I follow said that -- while they're not finding nearly as many good values as they were a year ago -- they're still seeing opportunities in a variety of sectors, industries, or types of stocks.

 

Take value manager Whitney Tilson, one of the few who saw the housing meltdown coming. Tilson told Forbes.com that with the market up some 80%, the big bargains that existed a year ago have faded -- though he doesn't think we're in "bubble territory".

Tilson says we're now in a "grind it out" market, and he's finding opportunities in solid, safe stocks like Berkshire Hathaway (BRK.B) and Microsoft (MSFT). "They’re not screaming cheap, but they’re safe,” he said. “They offer nice upside, limited downside. That’s how you grind it out and make decent returns. And then be patient and wait for those opportunities to really get greedy."

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Yale economist Robert Shiller also says the broader market isn't offering the great value it was a year ago -- the 10-year price/earnings ratio he pioneered is at about 22, well above its historical average of about 15. But he's high on at least one part of the market: oil-related plays. On Consuelo Mack's WealthTrack, Shiller said that oil stocks should be a significant part of an investor's portfolio "because we use oil, because we need oil. Our economy runs on oil." By investing in oil-related companies, he says, you can provide a hedge for when oil prices rise and hit you at the gas pump. "You could put 10% of your portfolio in oil," Shiller says.

 

Value legend Ron Muhlenkamp, meanwhile, is high on another part of the market: financial services firms. He told CNBC that while consumers have been saving more of their money, he thinks that won't last forever, and investors will want to return to riskier assets. When that does happen, investors will turn to financial services firms for advice on how to do better than they have in recent years, providing a chance for such firms -- and their stocks -- to excel. He's also finding value in technology stocks.

 

Another successful value manager, Russell Croft, expressed a view similar to Tilson's. Croft said he doesn't see the abundance of great bargains that existed a year ago. But he's still seeing opportunity. “The value we’re finding in the market is more of the steady-Eddie, more classic quality companies that have good balance sheets and that have been able to hold and gain market share,” he told BusinessWeek, adding that he thinks the market is still offering a good long-term entry point for investors, even after the big run-up. 

 

While Croft, Muhlenkamp, Shiller, and Tilson were talking about specific types of stocks they're focusing on, a few other top strategists were offering a broader bullish take this week. One was Bill Nygren, who told BusinessWeek that, while many investors are focusing on 2010 earnings to gauge market value, the market looks further forward than that. “The market is typically sold at 15 times [projected] earnings and is now trading at 12 times earnings if we look out two years, so it’s not high by historical standards,” he said. While he doesn't see any sectors as overbought, he's particularly high on controversial areas like healthcare, and he also likes tech stocks and media companies.

 

Wells Capital Management's James Paulsen also thinks the broader market has more room to run. He tells Yahoo! TechTicker that there will be bumps in the road, but he expects continued gains. Paulsen likes the wall of worry that remains in place, and the huge amount of cash still on the sidelines. He also says the economic recovery has -- despite what many pundits say -- been at least average, and possibly above-average, so far, a trend he expects to continue. He's high on cyclical and economy-sensitive sectors, including materials, technology, financials, and emerging markets. He does also caution that high inflation could at some point cause problems for stocks, however.

 

John Reese is founder and CEO of Validea.com, a premium investment research site, and Validea Capital Management, a separate account advisory firm. He is author of the new investing book, "The Guru Investor: How to Beat the Market Using History's Best Investment Strategies".