U.S. stocks look cheap relative to earnings forecasts, but investors should consider carefully whether those forecasts are reliable.

Estimates for large American companies have crept higher this year. At the end of March, earnings linked to the S&P 500 index were expected to total $78.05 a share this year. That forecast rose to $81.82 a share by the end of June and stands at $82.15 a share today. That puts the index at less than 14 times 2010 earnings, on par with the historic average price for U.S. stocks of about 15 times trailing earnings.

Forecasts for next year have S&P 500 earnings rising 15% to $94.60 a share, putting the index at less than 12 times 2011 earnings. That seems a good deal by historic standards, and compared with other investments. That level of profitability would give the index an earnings yield of more than 8%. Long-term corporate bonds of good quality pay only about 6% at the moment.

There are some reasons for caution. Analysts have a difficult enough time getting next quarter's earnings forecasts right. Estimates for 2011 rely heavily on guessing, particularly about changes in economic factors like employment and consumer spending. Also, $94.60 a share in yearly S&P 500 earnings would be a new record. The current record, $91.47, was set over four quarters ended June 2007, back when consumers were buying more than 16 million cars a year (versus estimates of fewer than 12 million this year), and when the nation's housing wealth was more than one-third greater than it is today. Finally, analysts who predict earnings for the market as a whole aren't nearly as bullish as those who make forecasts for individual stocks. They predict average 2011 earnings of $76.43 a share for the index, for a forward P/E ratio of close to 15, suggesting shares are fully valued.

The safest course for investors might be to pick shares that are priced for only modest earnings increases and avoid ones whose valuations seem to anticipate a huge jump in profitability next year. Below are listed three S&P 500 members whose shares have high P/E ratios based on the expectation of a sharp rebound in profits in coming years.

Robert Half International

Robert Half International is a staffing company specializing in finance, legal and administrative workers. The economic recovery has produced precious few jobs, as many companies that reduced their workforces are cautiously hoarding cash and bolstering their profit margins rather than hiring. Sales for Robert Half are thus expected to increase a mere 2% this year. That will nonetheless likely result in a jump in earnings from recently depressed levels, but even the highest 2011 earnings estimate among 15 analysts who cover the company puts shares at 23 times earnings.

Starwood Resorts and Hotels Worldwide

Starwood Resorts and Hotels Worldwide has a portfolio of more than 1,000 hotels under names like St. Regis, Sheraton, Westin and Le Meridien. Its debt is equal to about one-third of its stock market value, a reasonable figure by the standard of hoteliers, and the company is selling assets and securing management contracts in an effort to improve its margins and make financial results less volatile. Next year, analysts expect the company's earnings per share to increase by more than 40% to $1.42. Shares, however, are already priced at 35 times that figure. Investors seem to be anticipating a quick return to pre-recession travel levels. If they don't get one, shares could be left looking expensive

Vulcan Materials

Vulcan Materials sells crushed stone, sand and gravel used in construction materials like cement. At the height of the housing bubble, the company earned nearly $5 a share. This year, profits are expected to total just 33 cents a share. Sales volumes are picking up slowly, and earnings should multiply quickly as the company's quarries and factories operate closer to their production capacity. The company stresses that demand for its products is tied to public works projects and commercial building, not just housing. Just the same, it could be a long time before the company earns close to $5 a share again. The 2011 forecast stands at $1.25. That puts shares at 45 times earnings.