By Ben Steverman

From the perspective of last spring, this is a stock market that looks very expensive. From early March to the recent peak in mid-October 2009, the Standard & Poor's 500-stock index blasted 65% higher, before beating a small retreat in late October.

The big rally of 2009 has made it difficult to find stocks trading at cheap valuations. "Trying to find undervalued stocks in this kind of market is fraught with danger," warns Beth Larson, portfolio manager at Evermay Wealth Management. Much of the easy money has already been made, she says. "By this point, you have to be very careful what you're picking."

But that doesn't mean there aren't stocks with potential. Mark Travis, chief executive of Intrepid Capital...