In The IRS Report, Peter Shearlock recommends companies that meet his own stringent value tests. He applies value investing principles to selecting UK companies for investors who aim to buy and hold for several years. These are companies that he considers undervalued by the wider stockmarket or which have potential for recovery from some form of setback. Mr. Shearlock normally restricts his research to the top 350 UK companies by market capitalisation. Undervaluation can arise because investors focus on the old rather than the new aspects of a business--and larger companies usually have several divisions or business areas, so a dull business can often contain a rising star. In line with value investors generally, Mr. Shearlock has adapted from Benjamin Graham's original principles to suit modern conditions, but still emphasizes the fundamental virtues--a sound business model, strong finances, and firm management--as a guide to finding quality investment that can often be held for many years while providing rising dividends and steady capital appreciation. He has been researching companies for over 30 years and is a former city editor at The Sunday Times, for which he writes an investment column.