History shows that the stock market has been and can be beaten by those brave folks willing to buck the momentum herd and focus on fundamentals. The roster of those who are capable of delivering and sustaining market-beating investing results includes legends like Warren Buffett, Benjamin Graham, Peter Lynch, and Bill Miller. Time and time again, the folks who can beat index trackers like Vanguard Total Stock Index (AMEX:VTI) are those who are firmly grounded in value-investing principles.

My friend and colleague Philip Durell has studied these masters, their strategies, and their successes, and now he's sharing that knowledge with you. As the lead analyst for Motley Fool Inside Value, Philip's selections have dramatically outpaced the market's return since the newsletter's inception a little over a year ago. He has done so by profiling global stalwarts like diversified manufacturing giant 3M (NYSE:MMM), rather than suggesting subscribers risk their money on deeply cyclical recent value traps like U.S. Steel (NYSE:X).

Why value wins
The reason Philip's selections have so utterly trounced the market is simple. He, like the value greats that came before him, selects strong companies that are going through short-term tough times. Consider the saga of air conditioning giant LennoxInternational (NYSE:LII). About a year ago, the company faced an SEC investigation into its Canadian inventory accounting. As a result, its stock dropped as low as $13.97 on irrational fears. Recently trading at $26.37, it's up better than 88% in just about a year, mostly because the worst news is over. While not an Inside Value pick, situations like this are exactly the sort of thing that Philip looks to uncover for subscribers.

It sounds crazy, but such things happen all the time. In fact, at just about the same time that Lennox was bottoming out, Philip dug up long-term-care pharmaceutical services company Omnicare (NYSE:OCR) for his subscribers. Facing its own governmental problems with states trying to cut Medicaid reimbursement rates, along with a difficult acquisition battle, Omnicare's stock was also in the doldrums. Once that acquisition was completed and Omnicare showed it could still profit in spite of being reliant on cash-strapped state reimbursements, its shares have similarly rallied. They are up better than 80% since Philip made his selection, largely based on relief that the turbulence seems to have passed.

The market is an emotional roller coaster. When things are going well for a company, its stock can get priced as though the good times will last forever. When things are going poorly, the market often overreacts on the downside, pricing an otherwise solid firm as though its days are clearly numbered. Some would say that such irrational panic may be hitting tax preparation giant H&R Block (NYSE:HRB) right now. H&R Block is just now recovering from its own accounting mess (ironic for a company that specializes in taxes!). To add fuel to that fire, the company also runs a mortgage business. Thanks to an ugly interest rate environment, the stocks of fellow lenders like ImpacMortgage Holdings (NYSE:IMH) have been dramatically devalued, and H&R Block's shares are being held down in part because of the climate affecting that business line.

With an objective understanding of the worth of a business, confidence that the market will eventually sort itself out, and enough patience to wait out the process, value investors have beaten the market time and time again. At Inside Value, we're confident that history will repeat itself, and value will once again prevail.

Opportunity knocks
Just after the market closes this afternoon, another issue of Inside Value will be released, and two more companies will join our list of potential market-beating, value-priced investments. Take a 30-day free trial now, and be among the first to discover what they'll be. With your trial, you'll also have access to everything we've ever published. You'll be able to take a look at our updated value chart for all Inside Value's previously chosen companies and pick through past issues to decide for yourself how much value remains in those previous selections. Click here to begin your free trial and start your journey toward replicating the market-thrashing success of history's greatest value investors.

This article was originally published on Sept. 14, 2005. It has been updated.

At the time of publication, Fool contributor and Inside Value team member ChuckSalettaowned shares of Omnicare and Lennox. Omnicareand 3M are current Inside Value selections. The Fool has adisclosure policy.