In The Cabot Benjamin Graham Value Letter, editor J. Royden Ward searches for stocks that meet the investing criteria of the legendary Ben Graham, known as the father of value investing and mentor of Warren Buffett.

Here, the advisor takes a look at Overseas Shipholding Group (NYSE: OSG), a crude oil and energy shipping operation.

"Overseas Shipholding is a leading crude oil and energy shipping company with 120 vessels either owned or leased. In addition, the company derives 25% of revenues from grain, coal, and iron ore.

"Stocks, by just about every long-term valuation measure, are undervalued," says John Reese, who continues to recommend putting money to work in undervalued stocks.

In his Validea newsletter, he selects "undervalued" issues by using screens based on the investment strategies of leading investors such as Peter Lynch, Ben Graham and Warren Buffett. Here's a a look at four current buys in the oil sector.

Reese explains, "If you think you can predict investors' emotional states, or how an unprecedented economic crisis will play out, then go ahead and wait for the bottom. I suffer no such delusions, however.

"Rather than playing the risky game of bottom-calling -- which more often than not leads to investors missing the big initial push of a new bull run -- I'll continue to put money into undervalued stocks.

In The Cabot Benjamin Graham Value Letter -- which assesses stocks based on Graham's value investing critera, editor J. Royden Ward takes a look at Wal-Mart Stores (NYSE: WMT).

"In this month's Classic Benjamin Graham Value Model, our calculation suggests that the Dow is overvalued at 12,370 and undervalued at 8,305; as such, today the market is extremely undervalued.

"This low-risk environment means it's probably a great time to add risk by dabbling in our recommended stocks such as Wal-Mart Stores.

"How cheap is it? The recent decline in WMT shares has created an outstanding buying opportunity for investors. WMT shares now sell at only 12.3 times forward EPS with a dividend yield of 2.0%.

"Stryker (NYSE: SYK) is a bargain at 15.1x next 12-month EPS," says J. Royden Ward, editor of The Cabot Benjamin Graham Value Letter, a service which focuses on stocks that would be well-suited to the investing strategy of Ben Graham, legendary value investor and mentor to Warren Buffett.

"Stryker develops, manufactures and sells specialty surgical and medical products. Its orthopedic division makes hip, knee and other implants.

"SYK also makes a wide variety of medical products and instruments ranging from hospital beds to medical video cameras, surgical drills and saws, and instruments for implants.

"Jos. A. Bank Clothiers, Inc. (NASDAQ: JOSB) matches the value criteria used by our Benjamin Graham stock screening model by 100%," suggests John Reese.

In his Validea newsletter, he assesses stocks based on the strategies of numerous "legendary" stock market investors. Here's his review of the apparel retailing chain.

"Jos. A. Bank is a designer, retailer and direct marketer of men's tailored and casual clothing and accessories through stores, catalog and Internet.

"The company sells substantially all of its products exclusively under the Jos. A. Bank label through its 422 retail stores, as well as through the company's nationwide catalog and Internet operations.

"Our Ben Graham stock selection model requires that the current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. JOSB's current ratio of 2.81 passes the test.

"USEC (NYSE: USU) is the nation's leading supplier of enriched uranium for use in commercial nuclear power plants -- in fact, it is the only supplier," notes value investor Nathan Slaughter.

In Half-Priced Stocks newsletter, he explains, "Low-enriched uranium is commonly used as fuel in nuclear reactors, and no other company in the U.S. provides it, giving USEC a dominant position in a key niche market." Here is his review.

"Its competitive advantage? USEC has the single best competitive advantage there is: zero competition -- at least in the United States. While the firm does have a handful of rivals overseas, it has reaped the benefit of being the lone U.S. supplier.

"The company has also been awarded lucrative contracts to perform work for the U.S. Department of Defense.

"The company also benefits from the nation's longstanding nuclear non-proliferation treaty with Russia. Specifically, it participates in the salvaging of old Soviet nuclear warheads under the 'Megatons to Megawatts' program, which essentially gives the firm a sharply discounted source of uranium.

New York Times columnist David Leonhardt take an interesting look at how stocks and the market are valued, and how it differs from the way the Benjamin Graham, the father of securities analysis, believed in evaluating stocks.

When investors talk about price/earnings ratios today, they are generally referring to the past year's earnings. But Graham believe that that number could be misleading, and instead thought that investors should look at earnings over a period of at least 5 years. That approach seems quaint today. I would bet that most portfolio managers routinely buy stocks without looking at an earnings statement from 3 years ago, let alone the 10-year old statements that Graham suggested.

But in looking at Graham's analysis and applying it to the broader market, Leonhardt may be erring. Having been wiped out in the Great Crash, Graham learned that it isn't wise to try to predict market fluctuations. Applying Ben Graham's philosophy to the broader market just doesn't make sense. As Ken Fisher showed in his most recent book, the current price/earnings ratio of the market is not an indicator of future performance: Buying indices when the ratio is low and selling when it's high does not create alpha. Given that, it's surprising how much time is devoted to discussing the market's p/e ratio. While Leonhardt talks mostly about p/e ratios, Graham was a big fan of the price/book ratio. Graham's strategy was to buy a diversified portfolio of stocks trading below their net current asset values, and hold them until the market became more rational. Today's markets may indeed be more rational, because there are less than a handful of stocks meeting this criteria.

A lot of Graham's strategies are very dated today. The idea of buying stocks under net current asset value is impossible. Graham believed in wide diversification, and that just isn't possible with the kind of stocks he wanted. Late in his life, Graham conceded that most investors should probably just buy and hold index funds.

So what can we learn from Graham today? I believe the value of his teachings lies more in the philosophical way that he looked in the market, rather than the rudiments of his investment strategy. If you haven't already seen this analogy from Graham, print it out and post it next to your computer, and read it every time you are about to buy or sell a stock. From Wikipedia:

Graham's favourite allegory is that of Mr. Market, an obliging fellow who turns up every day at the share holder's door offering to buy or sell his shares at a different price. Often, the price quoted by Mr. Market seems plausible, but sometimes it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or to ignore him completely. Mr. Market doesn't mind this, and will be back the following day to quote another price. The point is that the investor should not regard the whims of Mr. Market as determining the value of the shares that the investor owns. He should profit from market folly rather than participate in it. The investor is advised to concentrate on the real life performance of his companies and receiving dividends, rather than be too concerned with Mr. Market's often irrational behaviour.

In the final analysis, that is Graham's most valuable contribution to investment theory.