"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.

Lufkin Industries (NASDAQ: LUFK) serves the heavy industry arena. Its oil field division manufactures, services and refurbishes oil field pumping units. It also provides computer control equipment for the units and operates an iron foundry to produce castings for new units. The company's power transmission segment provides gearboxes for industrial applications and makes parts for after-market service. The firm operates in North America, Latin America and Europe.

Lufkin pleased investors last week, when it reported Q1 EPS of $1.01 and revenues of $147 million. Analysts had been expecting $1.00 and $132.7 million. Management also guided Q2 EPS to $1.30-$1.40 ($1.20 consensus) and FY08 EPS to $5.10-$5.30 ($5.17 consensus). Backlog totals increased 45.2% from the year-ago quarter and 17.9% from the end of 2007.

If you are ever called on to write a piece about vertical business integration, there is an interesting case in Lufkin, Texas. The firm provides oil well pumps, the gears to run them, the electronic systems to control them and the trailers to haul them.

Lufkin Industries (NASDAQ: LUFK) serves the heavy industry arena through three divisions. Its Oil Field segment manufactures, services and refurbishes oil field pumping units. It also provides computer control equipment for the units and operates an iron foundry to produce castings for new units. The company's Power Transmission segment provides gearboxes for industrial applications and makes parts for after-market service. Lufkin's Trailer segment manufactures and services various highway trailers for the freight-hauling market. The company operates primarily in the United States, Canada, Europe and Latin America.

The firm pleased investors last week, when it reported Q1 EPS of $1.17 and revenues of $148.10 million. Analysts had been expecting $1.05 and $146.1 million. Management also offered in-line guidance for Q2 and FY07 earnings.