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Jan. 12 (Bloomberg) — Legg Mason Inc.’s Bill Miller said the top 10 stocks in the Standard & Poor’s 500 Index are undervalued.

The biggest 10 companies on the U.S. market’s index of most valuable stocks have an average price of about 12 times earnings, Miller said today in a CNBC television interview. He said they should be between 14 and 18 times earnings.

“I think there’s a lot of value in the overall market,” said Miller, chairman and chief investment officer of Legg Mason Capital Management, a unit of the Baltimore-based company.

Miller’s $4.87 billion Legg Mason Capital Management Value Trust rose 41 percent in 2009, beating 76 percent of similarly managed funds, according to Bloomberg data. The gain marks the first time since 2005 that Miller beat the S&P 500 Index, which rose 26 percent including reinvested dividends. Miller topped the benchmark for a record 15 straight years through 2005.

Of the top 10 S&P stocks, Miller said he favored New York- based JPMorgan Chase & Co. and General Electric Co., in Fairfield, Connecticut. He said he expected GE to restore its dividend within the next two years.

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