The market is in a very happy mood in 2012. In addition to beginning the year with attractive valuations, U.S. economic data suggests that the economy is on the mend. With housing indicators showing that the bottom may have been hit and unemployment not getting worse, consumer confidence is improving. That's good for the economy, which helps the market rally.

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Participating Intelligently
While investing today poses greater risk than it did last month, that's always the case when valuations are increasing. While some great gains have already passed, investors should always pay attention to the value they get at the price paid. Clearly, prices were better when the S&P 500 was trading at 1200, but even at 1400, some companies are poised to do well and trading for a reasonable price. Drug giant Abbot Laboratories (NYSE:ABT) currently yields about 3.3% and may appeal to more conservative income-seeking investors. More so, the company is splitting up into separately traded public entities. The transaction will likely be completed at year's end and create one company that will retain the pharmaceutical business, and another to retain the medical device business. Shares should continue to do well, as this transaction is expected to unlock shareholder value.

Growth at Value Price
Despite trading at a new high of around $90 a share, Advance Auto Parts (NYSE:AAP) still trades at a respectable 17 times trailing earnings while EPS is approximately 5.11. More so, AAP continues to trade at a discount to peer O'Reilly Automotive (Nasdaq:ORLY) despite the fact that Advance Auto is buying back boatloads of its shares at favorable prices. At a market cap of around $6.5 billion, AAP trades at one times sales while ORLY trades for double that ratio. Yet Advance Auto continues to make strides in the faster-growing commercial segment. The market is catching on, as shares have surged in 2012 but are attractively valued given the future growth.

With little respect bestowed on financials these days, banking and credit card company Discover Financial Services (NYSE:DFS) is a gem. The company continues to boost EPS buy, aggressively pursuing cost cuts and share buybacks. Low rates continue to widen spreads and increase profitability. However, as customers continue to gain confidence, they will increase payment and banking transactions, which bodes well for DFS.

SEE: A Breakdown Of Stock Buybacks

The Bottom Line
It's not too late to make some decent investments from a risk reward perspective today. As the market advances, investing risk naturally increases but seeking out quality companies where you can pay below a reasonable price for growth will likely work going forward.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.

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