Stocks are a good value for investors who think the economic hit from the coronavirus is temporary, Oakmark Funds partner Bill Nygren told CNBC on Tuesday. 

“We think stocks are really cheap if you believe, as we do, that the economy is going to eventually recover, as will the P/E multiples,” the value investor said on “Fast Money.”

Nygren’s comments Tuesday came after another historic day for stocks, with the Dow Jones Industrial Average rising more than 11% to record its best day in 87 years. It comes during a volatile period for stocks since February highs as Wall Street responds to the economic shock from the coronavirus. 

As investors consider which equities to buy, they must make an important distinction between one-time occurrences for a company and changes to long-term earnings estimates, Nygren said. 

“Long-term changes then you have to think about applying a P/E multiple to those changes,” he said. Investors often use price-to-earnings ratios to determine the relative value of a stock.”

“If you’re just talking about something that’s a one-time hit, then obviously the multiplier on that is just one,” Nygren continued. 

Nygren pointed to Ally Financial as an example of a cheap stock that will hold up despite the economic threat presented by the COVID-19 pandemic.

The Detroit-based bank, which closed Tuesday up 17.6% at $14.27 per share, is trading around one-third of its book value, Nygren noted. 

Ally is expected to earn just above above $4 per share this year, and “they could lose those earnings if this lasts more than a quarter or two,” Nygren said. 

“But you have to think about the current slump lasting more than a year for it to be more than a $4 hit to business value, and the stock has fallen $20 in the last month,” Nygren said.

“So we think there are a lot of attractive values if you believe the economy is eventually going to get better,” he added. 

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