The S&P/ASX 200 Index (ASX: XJO) is knocking on the door of another all-time high, bringing gains to more than 11% for the year to date.

But the index is also at a frothy valuation when compared to the earnings of the underlying businesses that comprise its makeup.

More so when compared to history.

Starting valuations matter – a lot. They are perhaps one of the most critical parts of investing over the long term.

Consequently, investors may be searching for names within the ASX 200 that present more attractive prices.

Let's take a look.

What's driving the ASX 200 higher?

The ASX 200 has surged on the back of heavyweights like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), and CSL Ltd (ASX: CSL).

Together, these three juggernauts account for over 20% of the index's weight, making their performance crucial to the index's moves.

Each of these names, plus others with heavy weightings, have caught a bid in recent weeks, following the outcome of the US election and the US Federal Reserve lowering interest rates in the same week.

As such, the ASX 200 Index is running hot. But it is expensive. Expensive because the price investors are willing to pay for $1 of earnings in the index has shot well above long-term averages.

This is measured in the price-to-earnings (P/E) ratio, which also provides comparisons of valuation between securities. A stock trading at a higher P/E is more expensive than a lower, and vice versa.

And depite the index powerhouses driving the market to new heights, the current trailing 12 months P/E ratio on the benchmark is at 26.2 times, according to S&P Capital IQ.

The average P/E since 1980 is about 17 times earnings. It reached an all-time high of 80 in April 2021, when the pandemic fever caught onto markets.

In December 2022, it nudged below the 15 times mark. The current P/E is, therefore, well above the market average, meaning it is 'expensive' relative to history.

But opportunities still exist within the ASX 200 for value-focused investors.

Which ASX 200 stocks are 'cheaper' than the index?

According to data obtained from Capital IQ, 83 companies are currently trading at a P/E ratio less than the ASX 200 index.

I won't list all 83 here, but in the table below are some of the more well-known names.

These stocks boast P/E ratios well below the index average, suggesting potential value for investors looking to avoid the broader market's frothiness.

However, many of these companies are in resource-intensive industries, which often have lower P/E ratios due to the cyclical nature of their earnings.

Similarly, Helia and Magellan Financial have faced their own specific challenges, which may have temporarily depressed their valuations.

That said, a lower P/E doesn't always mean a stock is undervalued—it could reflect market concerns about growth prospects or industry headwinds.

In other words, it could just be a low-valued business. To make a thoughtful judgement, it is also necessary to appraise it against factors of growth, returns on capital, and cash flows.

The bottom line

As the ASX 200 flirts with new record highs, investors should tread carefully. While the index's current valuation may seem stretched, opportunities abound in individual stocks trading at lower multiples.