Is the market overpriced? Maybe it is cheap, or perhaps it is fairly valued. This is the third in a series examining the issue. Still, it has been my contention that it does not make any difference because no matter how the market is valued as a whole, there are plenty of cheap stocks out there to accommodate a large amount of capital allocation even this deep into a bull run.

If you would like to follow along from the beginning, the initial post screened stocks for lower than market average P/E ratios: Serious Money: Market Looks Cheap to Me -- 35 Stocks. In the second installment, I looked at yield and PEG ratios: Serious Money: Still Cheap Market -- 35 Stocks + Yields & Growth.

Let's try and reduce the gambling by examining the facts and ignoring what the bulls and bears are chatting up at the moment. We started the process by screening for lower than market average P/E ratios, see: Serious Money: Market Looks Cheap to Me -- 35 Stocks.

Two more important criteria influence today's review: the yield, a favorite of "my pal Warren"; and the price-to-earnings-to-growth (PEG) a focus of Peter Lynch, the retired fund manager extraordinaire of Fidelity's Magellan Fund.

We frequently receive comments that the market is overpriced. Recently one of our active readers commented that the market P/E was 30, which it's not. The actual rate (S&P forecast) has been even higher at times due to the volatile market.

The average should trend closer to the long term P/E of 15.7 in the next few years. However, I have reviewed companies often covered on our site and come up with a list of 35 stocks that have price-to-earning ratios below the long-term average already. I think there are dozens of bargains regardless of the status of the overall market.

Homeowner insurance provider Chubb (CB) is having a rough day, as the company was downgraded to market perform from outperform at FBR Capital. The downgrade was accompanied by a price-target lowering from $60 to $65. This news forced the stock more than a percentage point lower in pre-open trade, and CB was more than 2% lower in early trading.

I find it rather difficult to believe that CB is going to get anywhere near $60 anytime soon. The shares are currently trending sideways between the support of its 10- and 20-monthly moving averages and the $53 to $55 region. I'm not sure why the company's target price would be set in all-time high range, but I am not one of the expert analysts.

Insurer Chubb Corp. (CB) is gaining amid a thinning insurance sector, which is a major reason I'm reiterating my buy rating for the company's shares, first recommended on May 29, 2009 at a price of $39.65. If you bought Chubb in May, you're up about 20%.

The strength of Chubb's operation, in a nutshell: a strong personal insurance brand, a diversified business (personal lines, commercial insurance, specialty insurance), and a stronger balance sheet than many competitors. Hence, look for continued market share gains for CB in 2010. Further, pricing is showing signs of bottoming/firming as of Q3 2009.

Despite largely positive corporate earnings reports, investor caution has set upon Wall Street. For the third straight day stocks are set to move into negative territory, with futures showing the three major U.S. indexes heading lower ahead of Thursday's opening bell.

Some blamed Wednesday's near 1% drops in the Dow Jones industrial average and the S&P 500 on a late-day sell-off driven by the latest Beige Book survey from the Federal Reserve that showed the economy is ever so slowly emerging from recession -- too slowly, it would seem, for investors.

Other insurers' loss is Chubb Corp.'s (NYSE: CB) gain. Back in May, the case was made that given competitors' woes, and Chubb's demonstrated business model, superior personal lines, and diverse business mix, CB deserved a higher multiple than its May P/E of 9.

Well, the market finally took note of CB, boosting shares this summer, hence I'm Reiterating my Buy rating for Chubb, first recommended on May 29, 2009 at a price of $39.65. If you bought CB then, you're up about 23%.

TheStreet.com's Jim Cramer says that it's the most conservative player in an industry filled with gunslingers.

The keepers of the Dow Jones Industrial Average must have felt insurance-less after the defrocking of AIG (NYSE: AIG) (Cramer's Take), so it's fitting that they added Travelers (NYSE: TRV) (Cramer's Take) to the list, even as I would have preferred Ford (NYSE: F) (Cramer's Take) or Apple (NASDAQ: AAPL) (Cramer's Take).

They needed a financial that wasn't a bank and there aren't many out there that still trade at anything but desperate levels or weren't saved by the government.

The Dow's sell-off from 14,000 and the accompanying investor reluctance to deploy capital has created bargains, and Chubb is one.

In general, analysts expect Chubb's (NYSE: CB) financial strength and resultant market share gains from weaker insurers exiting business lines to offset a likely incremental decline in FY2009 revenue.

Analyst upgrades:

• Banc of America/Merrill upgraded DPL Inc (NYSE: DPL) to Neutral from Underperform following the settlement agreement with staff of the Public Utilities Commission of Ohio on Electric Security Plan.
  
• Friedman Billings upgraded SeaBright Insurance (NYSE: SBX) to Outperform from Market Perform on valuation as they believe shares are oversold at current levels. Despite upgrading, the firm lowered its target price to $14 from $16.
  
• JP Morgan upgraded AT&T (T) to Overweight from Neutral as it believes upside earnings revisions are likely in 2009 due to the company's conservative wireline margin outlook. The firm finds the stock's valuation attractive at current levels and raised their target on shares to $28 from $24.
• Chubb (NYSE: CB) was upgraded to buy from Neutral at UBS.
  
• Cascal B.V. (NYSE: HOO) was raised to Outperform from Neutral at Credit Suisse.
  
• Healthcare Realty Trust (NYSE: HR) was upgraded at Keefe Bruyette to Outperform from Market Perform.

Analyst upgrades:

• Citigroup upgraded shares of Akamai (NASDAQ: AKAM) to Buy from Hold following the company's Q4 results as they believe fundamentals are stabilizing. The firm raised their target price to $22 from $12.
  
• Baird upgraded Theravance (NASDAQ: THRX) to Outperform from Neutral. The firm said the company looks poised to realize the two-product success necessary to drive profitability, and Horizon will likely play a role in succeeding $7B+ Advair. Note that last night Theravance/Glaxo (GSK) reported positive results for Horizon.
  
• RBC Capital said Aeterna Zentaris (NASDAQ: AEZS) is on the cusp of a Cetrorelix deal and has turned more positive on shares. Shares were upgraded to Outperform from Sector Perform.
  
• Marvell Tech (NASDAQ: MRVL) was upgraded to Buy from Neutral at Goldman and added to the firm's Conviction Buy List.
  
• Sangamo BioSciences (NASDAQ: SGMO) was raised to Buy from Neutral at Merriman.
  
• Arthur J. Gallagher (NYSE: AJG) was upgraded at Piper Jaffray to Buy from Neutral.

It was July 1, 2008 when I first posted Serious Money: Five stable stocks for troubled times. The title speaks for itself. This update, after nine weeks and horrible market conditions, is through Friday October 3, 2008.

The index for comparison is the Standard & Poor's 500 Index, which closed on June 30, 2008 at 1,280.00. The S&P closed Friday at 1,099.23 , down 14.12%.

Each of my five picks is beating the market and three of the five are actually up despite crushing news in the financial sector, unemployment and housing. Congress did pass a Wall Street backstop/bailout bill that President Bush has signed, but only after adding another 450 pages and $130 billion to the amount. Although the five stocks have averaged a 0.75% loss, as intended, they easily beat the S&P by 13.37%.

Here are the five stocks that I still think are worth considering. For my original rationale see the linked story above.

1) Johnson and Johnson (NYSE: JNJ) -- when recommended, the stock closed at $64.34 and paid a 2.89% dividend yield. It closed Friday at $66.16 -- up 2.75%. JNJ was featured in Barron's this month as the most respected from the top 100 companies in the world.

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) -- when recommended, the stock closed at $45.80 and paid a 1% dividend yield. It closed October 3 at $46.08 -- up 0.06% 0.62% Teva (of Isreal) is the largest generic drug company in the world and just got bigger through the acquisition of Barr Pharmaceuticals last month.

The Dow Jones is down around 300 points again (Update: closed down 450) so it's time to revisit my stable stock picks to see how they are holding up. Each of my five picks is beating the market and all of them are up despite crushing news in the financial sector every day since my last report.

The prediction business is highly speculative, but I gave it a try anyway, searching for stocks that would hold their value. This update is a spot-check of my earlier post, Serious Money: Five stable stocks for troubled times. The closing prices are from yesterday but these companies are doing well in today's down market too as the government steps in again and bails out AIG with $85 billion.

The standard for comparison is the Standard & Poor's 500 Index, which closed on June 30, 2008 at 1,280.00. The S&P closed yesterday at 1,213.59, down 5.47%. The percentage gains for the stable stocks do not include dividends. They are up 4% for a 9.47% advantage. The volatility in the market today may alter some of the data points so expect an after market update. Update: the following five stocks remain ahead of the market but they did turn down in the last hour.

1) Johnson and Johnson (NYSE: JNJ) -- when recommended, the stock closed at $64.34 and paid a 2.89% dividend yield. It finished at $69.80 -- up 8.48% -- and is trading up this morning. JNJ was featured in Barron's this week as the most respected from the top 100 companies in the world. Final Update: down $-0.29 to $69.51

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) -- when recommended, the stock closed at $45.80 and paid a 1% dividend yield. It finished at $45.96 -- no change -- and is trading slightly down this morning. Teva is the largest generic drug company in the world and just got bigger throught the acquisition of Barr Pharmaceuticals. Final Update: down $-1.25 to $44.11

Analyst upgrades:

• Merrill upgraded shares of General Motors (NYSE: GM) and Ford (NYSE: F) to Neutral from Underperform on expectations for fundamentals to improve in 2009.
  
• Citigroup upgraded Chubb (NYSE: CB) and Travelers Group (NYSE: TRV) to Buy from Hold as they expect the company to benefit from the AIG (NYSE: AIG) fallout. The firm raised Chubb's target to $57 from $56 and Travelers Group's target to $51.50 from $49.50.
  
• Credit Suisse upgraded shares of SAP AG (NYSE: SAP) to Outperform from Neutral as they believe margin expansion can drive higher profitability.
• JetBlue (NASDAQ: JBLU) was upgraded to Buy from Hold at Argus.
• Goldman raised Merrill Lynch (NYSE: MER) to Neutral from Sell.
  
• NetLogic (NASDAQ: NETL) was upgraded to Buy from Neutral at Piper.

Analyst downgrades:

• JP Morgan downgraded Eli Lilly (NYSE: LLY) to Underweight from Neutral citing the company's early stage pipeline and generic competition.
  
• Merrill downgraded Unilever (NYSE: UL) to Neutral from Buy as they believe the incoming CEO is unlikely to bring a major restructuring or split up the company.

I was out all morning and returned to my desk to find employment and retail numbers sent the Dow Jones Industrial Average tumbling down 345 points today. That made me think it was important to check out how stable my stable stocks -- stocks with the ability to ride out this bearish run -- were doing in bad times.

This update is a spot-check of my earlier post Serious Money: Five stable stocks for troubled times, to see how my picks are holding up so far. Closing prices are for today.

The standard for comparison is the Standard & Poor's 500 Index, which closed on June 30, 2008 at 1,280.00. The S&P closed today at 1,236.82, down 3.37%. The percentage gains do not include dividends. Four out of five of my picks beat all the indices; CB was close.

1) Johnson and Johnson (NYSE: JNJ) -- when recommended the stock closed at $64.34 and paid a 2.89% dividend yield. It finished at $70.45 -- up 9.5%

2) Teva Pharmaceuticals ADR (NASDAQ: TEVA) -- when recommended the stock closed at $45.80 and paid a 1% dividend yield. It finished at $47.92 -- up 4.63%.