These stocks trading at discounts to their valuations may be worth buying, traders say

Amazon, Target and Walmart aren't the only places buyers can find deep discounts this week.

There's also a fire sale in a group of stocks trading well below both their historical forward price-earnings multiples over the last five years and their forward PEs over the next 12 months.

Stock Historical Forward PE Forward PE

But are these bargain buys or possible bull traps?

Matt Maley, chief market strategist at Miller Tabak, told CNBC's "Trading Nation" on Wednesday that he was taking a cautiously positive stance on one name in particular: Tapestry.

While he was concerned about the possibility of more layoffs at the luxury brand house before the end of the year and noted that the stock doesn't pay investors a dividend to wait for a potential bounce, it "looks quite compelling" on a technical basis, Maley said.

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"The stock has already broken two key resistance levels and it's now testing a third. The first [is] the 200-day moving average and the second one is a double-top high from both June and August, and it's broken nicely above that. That was at about $18," Maley said.

With Tapestry closing right at $19 on Wednesday, it's now approaching a two-year trend line from 2018, Maley said.

"If it can break that third resistance line and kind of confirm the breakout in the stock after a pretty serious slide, it's going to attract a lot of that momentum money that has become so prevalent in the marketplace," he said. "I'd just note, too, that the stock has only retraced about a third of its sell-off. That's a lot less than a lot of other stocks in the market."

John Petrides, a portfolio manager in the wealth management division of Tocqueville Asset Management, had two other names on his radar: AT&T and Lennar.

With AT&T, "the idea is you're getting over a 7% dividend yield for a company that generated a tremendous amount of cash flow and is paying down debts following the Time Warner transaction a couple years ago," Petrides said in the same "Trading Nation" interview.

Although Time Warner's delayed movie slate is an issue for AT&T, the telecommunications giant has another "cash cow," Petrides said: the 5G rollout.

"With the new iPhone being released, that should add some movement upward to the mobile side of the coin for AT&T, which I think is positive for the story," he said. "And … in an environment where interest rates are zero and investors are scrounging for places for income, we don't think you're paying much from a valuation standpoint for AT&T's yield, which we feel pretty confident in."

Petrides also saw several catalysts driving Lennar's business, including consumers' flight to the suburbs from more urban areas due in part to the coronavirus pandemic.

"Lennar is one of the quality lower-cost producers in the housing market," he said. "Just as it's been a benefit for AT&T in terms of looking for yield, low interest rates have been a benefit for homebuyers. And as the economy recovers, with low interest rates and the movement out of the city, we think the housing market has the wind at its back and I think Lennar is attractive here."

Disclosure: Petrides and certain Tocqueville clients own shares of AT&T. Tocqueville also owns shares of Lennar.

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