Former Federal Reserve Chairman Alan Greenspan said U.S. stocks offer good value and are likely to rise as corporate earnings increase over time.

“Stocks are very cheap,” Greenspan said at the Bloomberg Washington Summit hosted by Bloomberg Link, citing “very low price-earnings ratios.”

“There is no place for earnings to grow except into stock prices,” said Greenspan, who served as Fed chairman from August 1987 to January 2006.

Stocks have rallied on better-than-forecast corporate profits and signs of economic strength. The Standard & Poor’s 500 Index has risen more than 12 percent this year, the best start to a year since 1998.

The index rose 1 percent to 1,411.57 at 11:15 a.m. in New York after a report showed that U.S. manufacturing unexpectedly expanded at the fastest pace in 10 months in April.

The Institute for Supply Management’s factory index climbed to 54.8 last month, exceeding the most optimistic forecast in a Bloomberg News survey, from 53.4 in March, the Tempe, Arizona-based group’s report showed today. Readings greater than 50 signal growth. The median forecast in the Bloomberg survey called for a drop to 53. Measures of production and orders were the highest in a year.