Executive Summary  |   Portfolio  |   Guru Analysis  |   Watch List

Executive Summary	December 23, 2011

The Economy While the world continues to focus on and speculate about how Europe will deal with its debt crisis, the U.S. economy continues to plug along with improvement in some major areas. Perhaps the biggest may be the employment market. New claims for unemployment have fallen sharply over the past two weeks, reaching their lowest level since April 2008. Continuing claims, meanwhile, have fallen to levels not seen since before Lehman Brothers collapsed in September 2008. As we head into 2012, new claims are 14% lower than they were a year ago, and 45% lower than they were at their March 2009 high. Continuing claims are 13% lower than they were a year ago, and 46% below their recessionary high. In other words, both new and continuing claims for unemployment are close to half of what they were during the height of the Great Recession. Retail sales are also continuing to improve. New Commerce Department data showed that retail and food service sales increased 0.2% in November, the sixth straight month that they've risen. They thus reached another new all-time high, and stand nearly 7% higher than they were a year ago. That shows that Americans are not as tapped out as many have believed, a good sign for a country whose economy is driven by consumer spending. There is some reason for caution, however, as the personal savings rate is down to 3.5%, as of October (the latest month for which data is available). That's down from 5.2% at the beginning of 2011, though it's still significantly higher than it was when we entered into recession in late 2007. That figure will definitely be one to keep an eye on in the first few months of 2012. Some negative news came from industrial sector. Industrial production fell 0.2% in November, according to new Federal Reserve data. It marks the first monthly decline since April, though production remains 3.7% above year ago levels. Capacity utilization fell slightly to 77.8%, which remains below the 1972-2010 average of 80.4%. Some mixed news came from the housing market. The National Association of Realtors said that existing-home sales increased 4% in November, putting them more than 12% higher than they were a year ago. The realtor group did, however, issue revised numbers dating back to 2007, saying that a number of issues had resulted in existing-home sales being overcounted. On average from 2007-2010, the group said that existing-home sales were overstated by 14%. The revisions don't really change the trend of sales over the past five years, but they do mean that the housing market, already known to be weak, has been even weaker than believed. But there's hope: Housing starts jumped 9.3% in November and are 24.3% above year-ago levels, while building permit issuance for housing rose 5.7%, and is 20.7% above year-ago levels, according to a new government report. And, the National Association of Home Builders/Wells Fargo Housing Market Index increased for the third straight month in December -- the first time that has happened in more than two years -- and showed that homebuilder sentiment is higher than it's been since the spring of 2008. We don't want to jump the gun, but perhaps we are finally seeing the housing turnaround we've waited so long for. As for Europe, debt crisis news there continues to be the market's main driver, though most of the gyrations are based on speculation. The situation remains murky, and the market will no doubt continue to be riveted to the developments there in the opening weeks of 2012. Since our last newsletter, the S&P 500 returned 1.6%, while the Hot List returned 0.9%. So far in 2011, the portfolio has returned -16.7% vs. -0.3% for the S&P. Since its inception in July 2003, the Hot List is far outpacing the index, having gained 124.9% vs. the S&P's 25.3% gain. Hopeful Signs for the New Year The year of 2011 has been a tough one for stock investors. With a week left before the end of the year, the S&P 500 is on track to be about flat for the year, and the market has put investors through some major ups and downs over the course of the past 12 months. Most investors continue to shy away from equities. And, as I discussed in our last newsletter, the year has been worse for the Hot List, which is well in the red, though its long-term track record remains exceptional. While many investors remain skittish as we head into 2012, I see a number of reasons to be optimistic. Here are a few of the main factors that make me feel good about the coming year. Valuation: There are, of course, a number of ways to value the broader market. But of the myriad of valuation metrics that my models use, the vast majority are showing the market to be either cheap or fairly valued. The exception to that is the ten-year P/E ratio, which for the S&P 500 remains between 20 and 21, higher than its long-term average of about 16. Other than that, however, a variety of metrics paint a positive picture. Trailing-12 month P/E ratios for the S&P 500 are 13.1 using operating earnings, and 14.3 using as-reported earnings, based on S&P data and Wednesday's closing price. Forward-looking P/Es are even better. The S&P's price/sales ratio, meanwhile, is 1.2, according to Morningstar.com. That's below the 1.5 target that my James O'Shaughnessy-based model uses to identify bargains, and it's within the "good value" range (0.75 to 1.5) that my Kenneth Fisher-inspired model uses. The stock market-to-Gross Domestic Product ratio is also quite reasonable. According to GuruFocus.com, it's at 86.4% (as of December 21), which is within the "fair value" range that was determined by examination of historical data. (Note: for this metric, the site uses the Wilshire Total Market Index as a proxy for "the market".) This ratio is of particular interest to me, because Warren Buffett has cited the stock market-to-Gross National Product ratio (which runs very similar to the stock market/GDP ratio) as possibly being the best measure of where valuations stand at a given moment. Finally, the market's dividend yield is very attractive, particularly when compared to the near-record-low Treasury bond yields currently available. As of December 20, the S&P's dividend yield was 2.53%. Compare that to the 1.94% yield on the 10-year Treasury bond, and stocks lookvery attractive. Corporate Turnaround: Heading into the financial crisis of 2008 and the accompanying recession, American companies -- especially banks -- were stretched too thin. Financial companies were way overleveraged, and many non-financials had left themselves little wiggle room in the event of a major downturn. Today, that's much different. Yes, banks are still working off some bad debt, and low interest rates are decreasing lending spreads and hampering earnings. But overall it appears that they are in far better shape than they were in 2008 (thanks in no small measure to the federal government's assistance). In fact, according to Deutsche Bank, the ratio of total U.S. bank assets to cash -- a measure of liquidity -- is near all-time lows. It had climbed to nearly 40-to-1leading up to the financial crisis; now it is below 10-to-1, levels not seen since the early 1980s. Non-financials, meanwhile, have been stockpiling cash, not wanting to get hit by another major downturn. Cash at companies excluding banks, utilities, truckers, and automakers was a record $998.9 billion last quarter, according to Bloomberg. And there are indications that more companies may be putting their cash to work. This year, shares of the 40 S&P 500 companies that bought back the most of their own stock or offered the biggest dividends climbed an average of 5.7%, Bloomberg reports; the 20 that hoarded the most cash fell an average of 15%. If the laggards are taking notice, that could mean more companies up their buybacks and dividends in 2012, which should help the market. Improving Economy, Gloomy Sentiment: While many pundits spent most of 2011 predicting recession -- and worse -- for the US economy, positive data has continued to flow in over the last several months. In fact it appears that growth has really accelerated toward the end of the year. But despite that, and despite Corporate America continuing to post strong profits and streamline operations, a sense of doom certainly seems to be hanging over the market. Some of the fear is merited, with the European debt crisis being a legitimate, serious problem that needs to be dealt with. Still, given the solid, if unspectacular, performance of the U.S. economy and the stellar growth that continues in other parts of the world, Europe and its problems are probably getting a bit more attention than they really deserve. Why? A big reason, no doubt, involves the lingering scars of the 2008 financial crisis, and Great Recession. After going through a crisis and recession that may have been the worse the U.S. has seen since the Great Depression, investors and Americans in general understandably have been left with a sense of foreboding. For many the crisis came on so swiftly and unexpectedly that it has left them with a sort of financial post-traumatic stress disorder. Not wanting to be burned so badly again, investors head for the hills and sell off stocks at the first sign or hint that another crisis is upon us. All you need to do is read the headlines to get an idea of the fear that is still out there. Recently, I read an article entitled "Five Reasons Why Investing is Dead". The article was rife with short-term thinking, but for now I don't want to get into all the specifics as to why I think it was misguided. Instead, the important point for this discussion is the hyperbole in the headline. Stock investing has been proclaimed dead on several other occasions by prominent news sources, perhaps most notably in 1979, when BusinessWeek ran a cover story entitled "The Death of Equities". The article came at the tail end of a very weak period for stocks, one that lasted over a decade. But within just a few years the market began to surge, remaining in bull market mode for most of the next two decades. These sorts of articles always come out when things have been going bad for an extended period, because people by nature are inclined to extrapolate the recent past out into the future -- it's what behavioral finance terms "recency bias". But as any investor worth their salt knows, the best time to invest in something usually isn't when the asset has been rising in price for an extended period; it's when prices are cheap and expectations are low. Given that, the current gloom hanging over the market is a positive if you're buying stocks now. Do I think that the current doom and gloom mindset will change completely in 2012? No. Frankly, I think it will take more than another year for investors and Americans to really feel like they have their feet on solid ground again. But I do think that we'll see gradual improvement in confidence in the coming year; the further and further we get from 2008, the more the pain will fade. What the lingering fears do seem to be doing, however, is putting something of a floor under stock prices. With many investors not only fearing but expecting the worst, some very bad scenarios are already baked into stock prices. That certainly doesn't mean that stocks can't go lower; but it does mean that the downside should be somewhat limited, while the upside should be great. And for value investors, that's a climate that is very attractive. I hope you all have a wonderful holiday and happy New Year, and we'll see you in 2012.		Editor-in-Chief: John Reese Since Inception   Hot List 124.9% S&P 500 25.3% Accuracy 56.0% Beta 1.2 YTD   Hot List -16.7% S&P 500 -0.3% Since Last Issue   Hot List 0.9% S&P 500 1.6% Avg. Fundamentals   Market Cap (mil) $18,414 PE Ratio 9.7 5 Yr EPS Growth 32.3% Yield 2.6% Rel. Strength 53 Portfolio Sectors Services 6 Basic Materials 1 Energy 1 Financial 1 Healthcare 1
Advertisement Validea Capital Management - Private Portfolio Management Based on Strategies of Legends Are you looking for an alternative to your underperforming mutual funds or financial advisor? Click here to download Validea Capital's investment kit and learn more about the firm's guru-based portfolios. Get More Information on Validea Capital! ** Validea Capital Management is a separate investment advisory firm managed by Validea.com founder John Reese. Thre information above in not intended as personal investment advice and should not be interpreted as such. The Fallen As we rebalance the Validea Hot List, 4 stocks leave our portfolio. These include: Kulicke And Soffa Industries Inc. (KLIC), Interpublic Group Of Companies, Inc. (IPG), Astrazeneca Plc (Adr) (AZN) and World Acceptance Corp. (WRLD). The Keepers 6 stocks remain in the portfolio. They are: Forest Laboratories, Inc. (FRX), Petroleo Brasileiro Sa (Adr) (PBR), Aeropostale, Inc. (ARO), Ternium S.a. (Adr) (TX), Capella Education Company (CPLA) and Bridgepoint Education, Inc. (BPI). The Newbies We are adding 4 stocks to the portfolio. These include: Cash America International, Inc. (CSH), Big Lots, Inc. (BIG), Devry Inc. (DV) and Jos. A. Bank Clothiers, Inc. (JOSB). Portfolio Changes Additions   CASH AMERICA INTERNATIONAL, INC. CSH BIG LOTS, INC. BIG DEVRY INC. DV JOS. A. BANK CLOTHIERS, INC. JOSB Deletions   KULICKE AND SOFFA INDUSTRIES INC. KLIC INTERPUBLIC GROUP OF COMPANIES, INC. IPG ASTRAZENECA PLC (ADR) AZN WORLD ACCEPTANCE CORP. WRLD Newcomers to the Validea Hot List Cash America International Inc. (CSH): : Cash America operates in more than 1,000 locations in the U.S. and Mexico, providing secured non-recourse loans -- pawn loans. It also offers short-term cash advances and check cashing services. The Fort Worth, Tex.-based firm has a market cap of about $1.3 billion. Cash America gets strong interest from my James O'Shaughnessy- and Martin Zweig-based models. To read more about the stock, see the "Detailed Stock Analysis" section below. Jos. A. Bank Clothiers (JOSB): Based in Hampstead, Maryland, Bank is a long-time Hot List favorite. In its most recent stint in the portfolio, the 100-plus-year-old men's clothing retailer gained 17% in just one month (late September to late October). The small-cap ($1.4 billion), has about 500 stores across the U.S. Bank gets strong interest from my James O'Shaughnessy growth model and my Warren Buffett-based strategy. To find out more about the stock's fundamentals, see the "Detailed Stock Analysis" section below. DeVry Inc. (DV): This for-profit education stock is based in Illinois. It's the parent of several universities that focus on business, healthcare, and technology, and it also offers programs for middle and high schoolers. DeVry ($2.5 billion market cap) gets strong interest from my Peter Lynch- and Joel Greenblatt-based models. For more on the stock, see the "Detailed Stock Analysis" section below. Big Lots, Inc. (BIG): Big Lots offers brand-name closeout and bargain merchandise, including consumables, seasonal products, furniture, housewares, and toys. It operates more than 1,400 retail stores across 48 states. Ohio-based Big Lots gets strong interest from my Peter Lynch- and James O'Shaughnessy-based models. To read more about it, see the "Detailed Stock Analysis" section below. News about Validea Hot List Stocks Capella Eduation Company (CPLA): Capella has approved a $50 million increase to its share repurchase program, the firm announced. The increase is in addition to the $35 million that was remaining under the program as of Sept. 30, 2011. AstraZeneca PLC (AZN): AstraZeneca said it is abandoning plans to develop a new anti-ovarian cancer drug, and also said a planned antidepressant has underperformed in tests, the Associated Press reported. The drugmaker said it would take a one-time pre-tax loss of $285 million on the ovarian cancer drug and another $96.5 million pre-tax loss on the antidepressant. The Hot List is selling the stock, which as of Thursday was up about 7% since joining the portfolio last month, on today's rebalancing. The Next Issue In two weeks, we will publish another issue of the Hot List, at which time we will take a closer look at my strategies and investment approach. If you have any questions, please feel free to contact us at hotlist@validea.com.

Current Portfolio Ticker Company Name Industry Guru Score BPI BRIDGEPOINT EDUCATION, INC. Schools 83 FRX FOREST LABORATORIES, INC. Biotechnology & Drugs 74 ARO AEROPOSTALE, INC. Retail (Apparel) 71 TX TERNIUM S.A. (ADR) Iron & Steel 68 CPLA CAPELLA EDUCATION COMPANY Schools 67 PBR PETROLEO BRASILEIRO SA (ADR) Oil & Gas - Integrated 60 BIG BIG LOTS, INC. Retail (Specialty) 59 JOSB JOS. A. BANK CLOTHIERS, INC. Retail (Apparel) 58 CSH CASH AMERICA INTERNATIONAL, INC. Misc. Financial Services 50 DV DEVRY INC. Schools 50 Ticker Market Cap Date Added Start Price Current Price Return BPI $1,157 3/18/2011 $18.02 $22.41 24.4% FRX $8,047 9/2/2011 $33.10 $30.12 -9.0% ARO $1,264 10/28/2011 $14.30 $15.65 9.4% TX $3,512 9/2/2011 $24.48 $17.52 -28.4% CPLA $501 9/2/2011 $30.42 $34.65 13.9% PBR $161,886 9/30/2011 $22.45 $25.62 14.1% BIG $2,477 12/23/2011 TBD $37.75 TBD JOSB $1,370 12/23/2011 TBD $49.24 TBD CSH $1,381 12/23/2011 TBD $47.16 TBD DV $2,542 12/23/2011 TBD $37.79 TBD

Detailed Stock Analysis Disclaimer: The analysis is from Validea's selection and interpretation of content from the guru's book or published writings, and is not from nor endorsed by the guru. See Full Disclaimer BPI   |   FRX   |   ARO   |   TX   |   CPLA   |   PBR   |   BIG   |   JOSB   |   CSH   |   DV   |   BRIDGEPOINT EDUCATION, INC. Profile Strategy: Small-Cap Growth Investor Based on: Motley Fool Bridgepoint Education, Inc. (Bridgepoint) is a provider of postsecondary education services. The Company's wholly owned subsidiaries, Ashford University and the University of the Rockies, are regionally accredited academic institutions that offer associate's, bachelor's, master's and doctoral programs in the disciplines of business, education, psychology, social sciences and health sciences. These institutions deliver programs online, as well as at its traditional campuses located in Clinton, Iowa, and Colorado Springs, Colorado. As of December 31, 2010, it offered approximately 1,345 courses, 71 degree programs and 134 specializations. As of December 31, 2010, it had 77,892 students enrolled in its institutions, 99% of whom were attending classes online. Analysis Guru Score: 83% PROFIT MARGIN: [PASS] This methodology seeks companies with a minimum trailing 12 month after tax profit margin of 7%. The companies that pass this criterion have strong positions within their respective industries and offer greater shareholder returns. A true test of the quality of a company is that they can sustain this margin. BPI's profit margin of 19.48% passes this test. RELATIVE STRENGTH: [FAIL] The investor must look at the relative strength of the company in question. Companies whose relative strength is 90 or above (that is, the company outperforms 90% or more of the market for the past year), are considered attractive. Companies whose price has been rising much quicker than the market tend to keep rising. Although BPI's relative strength of 87 is below the acceptable level, yet it is very close. Keep an eye on the stock as it could move into the acceptable range. COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: [PASS] Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These growth rates give you the dynamic companies that you are looking for. These rates for BPI (27.87% for EPS, and 27.16% for Sales) are good enough to pass. INSIDER HOLDINGS: [PASS] BPI's insiders should own at least 10% (they own 66.22% ) of the company's outstanding shares which is extremely attractive since the minimum requirement is 10%. A high percentage indicates that the insiders are confident that the company will do well. CASH FLOW FROM OPERATIONS: [PASS] A positive cash flow is typically used for internal expansion, acquisitions, dividend payments, etc. A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. BPI's free cash flow of $2.74 per share passes this test. PROFIT MARGIN CONSISTENCY: [FAIL] The profit margin in the past must be consistently increasing. The profit margin of BPI has been inconsistent in the past three years (Current year: 17.89%, Last year: 10.37%, Two years ago: 12.11%), which is unacceptable. This inconsistency will carryover directly to the company's bottom line, or earnings per share. R&D AS A PERCENTAGE OF SALES: [NEUTRAL] This criterion is not critically important for companies that are not high-tech or medical stocks because they are not as R&D dependant as companies within those sectors. Not much emphasis should be placed on this test in BPI's case. CASH AND CASH EQUIVALENTS: [PASS] BPI's level of cash $279.1 million passes this criteria. If a company is a cash generator, like BPI, it has the ability to pay off debt (if it has any) or acquire other companies. Most importantly, good operations generate cash. ACCOUNT RECEIVABLE TO SALES: [PASS] This methodology wants to make sure that a company's accounts receivable do not get significantly out of line with sales. It's a warning sign if a company's accounts receivable relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Accounts Receivable to Sales for BPI was 9.52% last year, while for this year it is 8.19%. Since the AR to sales is decreasing by -1.32% the stock passes this criterion. LONG TERM DEBT/EQUITY RATIO: [PASS] BPI's trailing twelve-month Debt/Equity ratio (0.00%) is at a great level according to this methodology because the superior companies that you are looking for don't need to borrow money in order to grow. "THE FOOL RATIO" (P/E TO GROWTH): [PASS] The "Fool Ratio" is an extremely important aspect of this analysis. If the company has attractive fundamentals and its Fool Ratio is 0.5 or less (BPI's is 0.20), the shares are looked upon favorably. These high quality companies can often wind up as the biggest winners. BPI passes this test. The following criteria for BPI are less important which means you would place less emphasis on them when making your investment decision using this strategy: AVERAGE SHARES OUTSTANDING: [PASS] BPI has not been significantly increasing the number of shares outstanding within recent years which is a good sign. BPI currently has 56.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock. SALES: [FAIL] Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. BPI's sales of $904.5 million based on trailing 12 month sales, are too high and would therefore fail the test. It is companies with $500 million or less in sales that are most likely to double or triple in size in the next few years. DAILY DOLLAR VOLUME: [PASS] BPI passes the Daily Dollar Volume (DDV of $8.5 million) test. It is required that this number be less than $25 million because these are the stocks that remain relatively undiscovered by institutions. "You'll be scoring touchdowns against the big guys on your turf." PRICE: [PASS] This is a very insignificant criterion for this methodology. But basically, low prices are chosen because "small numbers multiply more rapidly than large ones" and the potential for big returns expands. BPI with a price of $22.41 passes the price test, even though it doesn't fall in the preferred range. The price should be above $7 in order to eliminate penny stocks and below $20 since most stocks in this price range are undiscovered by the institutions. INCOME TAX PERCENTAGE: [PASS] BPI's income tax paid expressed as a percentage of pretax income this year was (41.42%) and last year (42.73%) are greater than 20% which is an acceptable level. If the tax rate is below 20% this could mean that the earnings that were reported were unrealistically inflated due to the lower level of income tax paid. This is a concern.   FOREST LABORATORIES, INC. Profile Strategy: Contrarian Investor Based on: David Dreman Forest Laboratories, Inc. (Forest) develops, manufactures and sells branded forms of ethical drug products, most of which requires a physician's prescription. The Company also focuses on the development and introduction of new products, including products developed in collaboration with licensing partners. Its products include those developed by the Company and those acquired from other pharmaceutical companies and integrated into its marketing and distribution systems. The Company's principal products include Lexapro, Namenda, Bystolic, Savella and Teflaro. On April 13, 2011, the Company acquired Clinical Data Inc. (Clinical Data), a specialty pharmaceutical company. Analysis Guru Score: 71% MARKET CAP: [PASS] Medium to large-sized companies (the largest 1500 companies) should be chosen, because they are more in the public eye. Furthermore, the investor is exposed to less risk of "accounting gimmickry", and companies of this size have more staying power. FRX has a market cap of $8,047 million, therefore passing the test. EARNINGS TREND: [PASS] A company should show a rising trend in the reported earnings for the most recent quarters. FRX's EPS for the past 2 quarters, (from earliest to most recent quarter) 0.90, 0.91 have been increasing, and therefore the company passes this test. EPS GROWTH RATE IN THE IMMEDIATE PAST AND FUTURE: [FAIL] This methodology likes to see companies with an EPS growth rate higher than the S&P in the immediate past and a likelihood that this trend will continue in the near future. FRX fails this test as its EPS growth rate for the past 6 months (-18.75%) does not beat that of the S&P (2.95%). This methodology would utilize four separate criteria to determine if FRX is a contrarian stock. In order to eliminate weak companies we have stipulated that the stock should pass at least two of the following four major criteria in order to receive "Some Interest". P/E RATIO: [PASS] The P/E of a company should be in the bottom 20% of the overall market. FRX's P/E of 7.45, based on trailing 12 month earnings, meets the bottom 20% criterion (below 8.06), and therefore passes this test. PRICE/CASH FLOW (P/CF) RATIO: [FAIL] The P/CF of a company should be in the bottom 20% of the overall market. FRX's P/CF of 6.44 does not meet the bottom 20% criterion (below 4.40), and therefore fails this test. PRICE/BOOK (P/B) VALUE: [FAIL] The P/B value of a company should be in the bottom 20% of the overall market. FRX's P/B is currently 1.55, which does not meet the bottom 20% criterion (below 0.63), and it therefore fails this test. PRICE/DIVIDEND (P/D) RATIO: [FAIL] The P/D ratio for a company should be in the bottom 20% of the overall market (that is the yield should be in the top 20%). FRX's P/D is not available, and hence an opinion cannot be rendered at this time. This methodology maintains that investors should look for as many healthy financial ratios as possible to ascertain the financial strength of the company. These criteria are detailed below. CURRENT RATIO: [PASS] A prospective company must have a strong Current Ratio (greater than or equal to the average of it's industry [2.04] or greater than 2). This is one identifier of financially strong companies, according to this methodology. FRX's current ratio of 3.58 passes the test. PAYOUT RATIO: [PASS] A good indicator that a company has the ability to raise its dividend is a low payout ratio. The payout ratio for FRX is 0.00%. Unfortunately, its historical payout ratio is not available. Nonetheless it passes the payout criterion, as this is a very low payout. RETURN ON EQUITY: [PASS] The company should have a high ROE, as this helps to ensure that there are no structural flaws in the company. This methodology feels that the ROE should be greater than the top one third of ROE from among the top 1500 large cap stocks, which is 18.06%, and would consider anything over 27% to be staggering. The ROE for FRX of 23.05% is high enough to pass this criterion. PRE-TAX PROFIT MARGINS: [PASS] This methodology looks for pre-tax profit margins of at least 8%, and considers anything over 22% to be phenomenal. FRX's pre-tax profit margin is 31.93%, thus passing this criterion. YIELD: [FAIL] The company in question should have a yield that is high and that can be maintained or increased. FRX's current yield is not available (or one is not paid) at the present time, while the market yield is 2.83%. Hence, this criterion cannot be evaluated. LOOK AT THE TOTAL DEBT/EQUITY: [PASS] The company must have a low debt to equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should be less than 20% or less than the industry average. FRX's Total Debt/Equity of 0.00% is considered exceptional.   AEROPOSTALE, INC. Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher Aeropostale, Inc. is a mall-based, specialty retailer of casual apparel and accessories, principally targeting 14 to 17 year-old young women and men through its Aeropostale stores and 7 to 12 year-old kids through its P.S. from Aeropostale stores. The Company designs, sources, markets and sells all of its own merchandise. P.S. from Aeropostale products can be purchased in P.S. from Aeropostale stores, in certain Aeropostale stores, including its new Times Square store in New York City and online at www.ps4u.com. As of January 29, 2011, it operated 965 Aeropostale stores, consisting of 906 stores in 49 states and Puerto Rico, 59 stores in Canada, as well as 47 P.S. from Aeropostale stores in 13 states. In addition, pursuant to a Licensing Agreement, one of its international licensees operated 10 Aeropostale stores in the United Arab Emirates as of January 29, 2011. During March 2011, it announced that it had signed a second licensing agreement. Analysis Guru Score: 100% PRICE/SALES RATIO: [PASS] The prospective company should have a low Price/Sales ratio. Non-cyclical (non-Smokestack) companies with Price/Sales ratios below 0.75 are tremendous values and should be sought. ARO's P/S of 0.53 based on trailing 12 month sales, is below 0.75 which is considered quite attractive. It passes this methodology's P/S ratio test with flying colors. TOTAL DEBT/EQUITY RATIO: [PASS] Less debt equals less risk according to this methodology. ARO's Debt/Equity of 0.00% is exceptional, thus passing the test. PRICE/RESEARCH RATIO: [PASS] This methodology considers companies in the Technology and Medical sectors to be attractive if they have low Price/Research ratios. ARO is neither a Technology nor Medical company. Therefore the Price/Research ratio is not available and, hence, not much emphasis should be placed on this particular variable. PRELIMINARY GRADE: Some Interest in ARO At this Point Is ARO a "Super Stock"? YES PRICE/SALES RATIO: [PASS] The prospective company should have a low Price/Sales ratio. Non-cyclical(non-Smokestack) companies with Price/Sales ratios below .75 are tremendous values and should be sought.ARO's P/S ratio of 0.53 is below .75 which is considered extremely attractive. It passes this methodology's P/S ratio test with flying colors. LONG-TERM EPS GROWTH RATE: [PASS] This methodology looks for companies that have an inflation adjusted EPS growth rate greater than 15%. ARO's inflation adjusted EPS growth rate of 27.27% passes the test. FREE CASH PER SHARE: [PASS] This methodology looks for companies that have a positive free cash per share. Companies should have enough free cash available to sustain three years of losses. This is based on the premise that companies without cash will soon be out of business. ARO's free cash per share of 1.76 passes this criterion. THREE YEAR AVERAGE NET PROFIT MARGIN: [PASS] This methodology looks for companies that have an average net profit margin of 5% or greater over a three year period. ARO, whose three year net profit margin averages 9.28%, passes this evaluation.   TERNIUM S.A. (ADR) Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher Ternium SA is a steel company in Latin America that manufactures and processes flat and long steel products for the construction, home appliances, capital goods, container, food, energy and automotive industries. The Company operates in three segments: Flat Steel Products, comprising the manufacturing and marketing of hot rolled coils and sheets, cold rolled coils and sheets, tin plate, welded pipes, hot dipped galvanized and electro-galvanized sheets and pre-painted sheets; Long Steel Products, comprising the manufacturing and marketing of billets (steel in its basic, semi-finished state), wire rod and bars; Others, comprising mainly pig iron, pellets and pre-engineered metal buildings. During the year ended December 31, 2010, Flat Steel Products accounted to 86% of the Company's overall revenues. Approximately 57% of Ternium's sales were generated in North America and 41% in South and Central America. Analysis Guru Score: 100% PRICE/SALES RATIO: [PASS] The prospective company should have a low Price/Sales ratio. Cyclical companies with Price/Sales ratios below or equal to .4 are tremendous values and should be sought. TX's P/S ratio of 0.40 based on trailing 12 month sales, is below .4 which is considered very favorable. It passes this methodology's P/S ratio test with flying colors. TOTAL DEBT/EQUITY RATIO: [PASS] Less debt equals less risk according to this methodology. TX's Debt/Equity of 34.52% is acceptable, thus passing the test. PRICE/RESEARCH RATIO: [PASS] This methodology considers companies in the Technology and Medical sectors to be attractive if they have low Price/Research ratios. TX is neither a Technology nor Medical company. Therefore the Price/Research ratio is not available and, hence, not much emphasis should be placed on this particular variable. PRELIMINARY GRADE: Some Interest in TX At this Point Is TX a "Super Stock"? YES PRICE/SALES RATIO: [PASS] The prospective company should have a low Price/Sales ratio. Cyclical companies with Price/Sales ratios below .4 are tremendous values and should be sought. TX's P/S ratio of 0.40 is below 0.4 which is considered extremely attractive. It passes this methodology's P/S ratio test with flying colors. LONG-TERM EPS GROWTH RATE: [PASS] This methodology looks for companies that have an inflation adjusted EPS growth rate greater than 15%. TX's inflation adjusted EPS growth rate of 27.59% passes the test. FREE CASH PER SHARE: [PASS] This methodology looks for companies that have a positive free cash per share. Companies should have enough free cash available to sustain three years of losses. This is based on the premise that companies without cash will soon be out of business. TX's free cash per share of 1.78 passes this criterion. THREE YEAR AVERAGE NET PROFIT MARGIN: [PASS] This methodology looks for companies that have an average net profit margin of 5% or greater over a three year period. TX, whose three year net profit margin averages 10.45%, passes this evaluation.   CAPELLA EDUCATION COMPANY Profile Strategy: Value Investor Based on: Benjamin Graham Capella Education Company is an online postsecondary education services company. Through its wholly owned subsidiary, Capella University, the Company offers a range of doctoral, master's and bachelor's programs. As December 31, 2010, it offered over 1,250 online courses and 43 academic programs with 136 specializations to over 39,000 learners. It also offers certificate programs, which consist of a series of courses focused on a particular area of study. In addition, Capella Education Company also offers academic services, such as new learner orientation, technical support, academic advising, research services (particularly for doctoral degree candidates), writing services and online tutoring. It also provides appropriate educational accommodations to learners with documented disabilities through its disability support services team. During the year ended December 31, 2010, it formed the joint-venture Sophia Learning, LLC, as majority owner. Analysis Guru Score: 71% SECTOR: [PASS] CPLA is neither a technology nor financial Company, and therefore this methodology is applicable. SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. CPLA's sales of $434.8 million, based on trailing 12 month sales, pass this test. CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. CPLA's current ratio of 3.80 passes the test. LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for CPLA is $0.0 million, while the net current assets are $127.5 million. CPLA passes this test. LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for CPLA were negative within the last 5 years and therefore the company fails this criterion. P/E RATIO: [PASS] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. CPLA's P/E of 13.30 (using the 3 year PE) passes this test. PRICE/BOOK RATIO: [FAIL] The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. CPLA's Price/Book ratio is 2.90, while the P/E is 13.30. CPLA fails the Price/Book test.   PETROLEO BRASILEIRO SA (ADR) Profile Strategy: Growth/Value Investor Based on: James P. O'Shaughnessy Petroleo Brasileiro SA Petrobras (Petrobras) is a Brazilian integrated oil and gas company. It operates in five segments: exploration and production; refining, commercialization and transport of oil and natural gas; petrochemicals; distribution of derivatives, electrical energy, biofuels and other renewable energy sources. Directly or through its subsidiaries, Petrobras is engaged in the research, extraction, refining, processing, commercialization and transport of oil from wells, shales and other rocks, its derivatives, natural gas and other liquid hydrocarbons, as well as in activities related to energy, promoting research, development, production, transport, distribution and commercialization of all forms of energy. As of December 31, 2010, it had 132 production platforms, 16 refineries, 291 vessels, 29,398 kilometers of pipelines, six biofuel plants, 16 thermoelectric plants, one pilot wind farm, 8,477 service stations and two fertilizer plants, as well as presence in 30 countries. Analysis Guru Score: 100% MARKET CAP: [PASS] The Cornerstone Value Strategy looks for large, well known companies whose market cap is greater than $1 billion. These companies exhibit solid and stable earnings. PBR's market cap of $161,886 million passes this test. CASH FLOW PER SHARE: [PASS] The second criterion requires that the company exhibit strong cash flows. Companies with strong cash flow are typically the value oriented investments that this strategy looks for. The company's cash flow per share must be greater than the mean of the market cash flow per share ($1.41). PBR's cash flow per share of $5.32 passes this test. SHARES OUTSTANDING: [PASS] This particular strategy looks for companies whose total number of outstanding shares are in excess of the market average (613 million shares). These are the more well known and highly traded companies. PBR, who has 6,522 million shares outstanding, passes this test. TRAILING 12 MONTH SALES: [PASS] A company's trailing 12 month sales ($133,691 million) are required to be 1.5 times greater than the mean of the market's trailing 12 month sales ($19,817 million). PBR passes this test. DIVIDEND: [PASS] The final step in the Cornerstone Value strategy is to select the 50 companies from the market leaders group (those that have passed the previous four criteria) that have the highest dividend yield. PBR, with a dividend yield of 5.06%, is one of the 50 companies that satisfy this last criterion.   BIG LOTS, INC. Profile Strategy: P/E/Growth Investor Based on: Peter Lynch Big Lots, Inc. is a closeout retailer. The Company's merchandising categories include Consumables, Furniture, Home, Hardlines, Seasonal, and Other. The Consumables category includes the food, health and beauty, plastics, paper, chemical, and pet departments. The Furniture category includes the upholstery, mattresses, ready-to-assemble, and case goods departments. Case goods consist of bedroom, dining room, and occasional furniture. The Home category includes the domestics, stationery, and home decorative departments. The Hardlines category includes the electronics, appliances, tools, and home maintenance departments. The Seasonal category includes the lawn and garden, Christmas, summer, and other holiday departments. The Other category includes the toy, jewelry, infant accessories, and apparel departments. At January 29, 2011, it operated a total of 1,398 stores in 48 states. In July 2011, the Company acquired Liquidation World Inc. Analysis Guru Score: 93% DETERMINE THE CLASSIFICATION: This methodology would consider BIG a "fast-grower". P/E/GROWTH RATIO: [PASS] The investor should examine the P/E (13.85) relative to the growth rate (45.32%), based on the average of the 3, 4 and 5 year historical eps growth rates, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for BIG (0.31) is very favorable. SALES AND P/E RATIO: [PASS] For companies with sales greater than $1 billion, this methodology likes to see that the P/E ratio remain below 40. Large companies can have a difficult time maintaining a growth high enough to support a P/E above this threshold. BIG, whose sales are $5,051.6 million, needs to have a P/E below 40 to pass this criterion. BIG's P/E of (13.85) is considered acceptable. EPS GROWTH RATE: [PASS] This methodology favors companies that have several years of fast earnings growth, as these companies have a proven formula for growth that in many cases can continue many more years. This methodology likes to see earnings growth in the range of 20% to 50%, as earnings growth over 50% may be unsustainable. The EPS growth rate for BIG is 45.3%, based on the average of the 3, 4 and 5 year historical eps growth rates, which is considered 'OK'. However, it may be difficult to sustain such a high growth rate. TOTAL DEBT/EQUITY RATIO: [PASS] This methodology would consider the Debt/Equity ratio for BIG (38.00%) to be normal (equity is approximately twice debt). FREE CASH FLOW: [NEUTRAL] The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it is above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for BIG (6.99%) is too low to add to the attractiveness of the stock. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria. NET CASH POSITION: [NEUTRAL] Another bonus for a company is having a Net Cash/Price ratio above 30%. Lynch defines net cash as cash and marketable securities minus long term debt. According to this methodology, a high value for this ratio dramatically cuts down on the risk of the security. The Net Cash/Price ratio for BIG (-4.32%) is too low to add to the attractiveness of this company. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.   JOS. A. BANK CLOTHIERS, INC. Profile Strategy: Growth/Value Investor Based on: James P. O'Shaughnessy Jos. A. Bank Clothiers, Inc. (Jos. A. Bank) is a designer, manufacturer, retailer and direct marketer of men's tailored and casual clothing and accessories and is a retailer of tuxedo rental products. It sells substantially all of its products exclusively under the Jos. A. Bank label through its 506 retail stores (as of January 29, 2011, which includes 12 outlet and factory stores and 14 franchise stores) located throughout 42 states and the District of Columbia in the United States, as well as through the Company's nationwide catalog and Internet (www.josbank.com) operations. It sources substantially all of its merchandise from suppliers and manufacturers or through buying agents using Jos. A. Bank designs and specifications. The Company operates in two segments: Stores and Direct Marketing. The Stores segment consists of all Company-owned stores, excluding outlet and factory stores (full-line stores). The Direct Marketing segment consists of its Internet and catalog operations. Analysis Guru Score: 100% MARKET CAP: [PASS] The first requirement of the Cornerstone Growth Strategy is that the company has a market capitalization of at least $150 million. This will screen out the companies that are too illiquid for most investors, but still include a small growth company. JOSB, with a market cap of $1,370 million, passes this criterion. EARNINGS PER SHARE PERSISTENCE: [PASS] The Cornerstone Growth methodology looks for companies that show persistent earnings growth without regard to magnitude. To fulfill this requirement, a company's earnings must increase each year for a five year period. JOSB, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 1.57, 1.82, 2.11, 2.56 and 3.08, passes this test. PRICE/SALES RATIO: [PASS] The Price/Sales ratio should be below 1.5. This value criterion, coupled with the growth criterion, identify growth stocks that are still cheap to buy. JOSB's Price/Sales ratio of 1.44, based on trailing 12 month sales, passes this criterion. RELATIVE STRENGTH: [PASS] The final criterion for the Cornerstone Growth Strategy requires that the Relative Strength of the company be among the top 50 of the stocks screened using the previous criterion. This gives you the opportunity to buy the growth stocks you are searching for just as the market is embracing them. JOSB, whose relative strength is 85, is in the top 50 and would pass this last criterion.   CASH AMERICA INTERNATIONAL, INC. Profile Strategy: Growth Investor Based on: Martin Zweig Cash America International, Inc. provides specialty financial services to individuals through retail services locations and through electronic distribution platforms known as e-commerce activities. These services include secured non-recourse loans, commonly referred to as pawn loans and unsecured consumer loans. The Company's consumer loan portfolio includes short-term single payment loans, longer-term multi-payment installment loans, credit services and participation interests purchased from third parties in the micro line of credit (MLOC) services channel. Through the Credit Services Organization program (the CSO program), it provides a third-party lender's consumer loan product in some markets by acting as a credit services organization on behalf of consumers. As of December 31, 2010, it operated in two segments: retail services and e-commerce. During the year ended December 31, 2010, the Company renamed its Internet Services Division as the E-Commerce Division. Analysis Guru Score: 92% P/E RATIO: [PASS] The P/E of a company must be greater than 5 to eliminate weak companies, but not more than 3 times the current Market P/E because the situation is much too risky, and never greater than 43. CSH's P/E is 11.36, based on trailing 12 month earnings, while the current market PE is 16.00. Therefore, it passes the first test. REVENUE GROWTH IN RELATION TO EPS GROWTH: [PASS] Revenue Growth must not be substantially less than earnings growth. For earnings to continue to grow over time they must be supported by a comparable or better sales growth rate and not just by cost cutting or other non-sales measures. CSH's revenue growth is 15.04%, while it's earnings growth rate is 15.99%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, CSH passes this criterion. SALES GROWTH RATE: [PASS] Another important issue regarding sales growth is that the rate of quarterly sales growth is rising. To evaluate this, the change from this quarter last year to the present quarter (21.5%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (14.4%) of the current year. Sales growth for the prior must be greater than the latter. For CSH this criterion has been met. The earnings numbers of a company should be examined from various different angles. Three of these angles are stability in the trend of earnings, earnings persistence, and earnings acceleration. To evaluate stability, the stock has to pass the following four criteria. CURRENT QUARTER EARNINGS: [PASS] The first of these criteria is that the current EPS be positive. CSH's EPS ($1.08) pass this test. QUARTERLY EARNINGS ONE YEAR AGO: [PASS] The EPS for the quarter one year ago must be positive. CSH's EPS for this quarter last year ($0.90) pass this test. POSITIVE EARNINGS GROWTH RATE FOR CURRENT QUARTER: [PASS] The growth rate of the current quarter's earnings compared to the same quarter a year ago must also be positive. CSH's growth rate of 20.00% passes this test. EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: [FAIL] Compare the earnings growth rate of the previous three quarters with long-term EPS growth rate. Earnings growth in the previous 3 quarters should be at least half of the long-term EPS growth rate. Half of the long-term EPS growth rate for CSH is 7.99%. This should be less than the growth rates for the 3 previous quarters which are 0.92%, 12.87% and 27.27%. CSH does not pass this test, which means that it does not have good, reasonably steady earnings. This strategy looks at the rate which earnings grow and evaluates this rate of growth from different angles. The 4 tests immediately following are detailed below. EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3 QUARTERS: [PASS] If the growth rate of the prior three quarter's earnings, 11.59%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 20.00%, (versus the same quarter one year ago) then the stock passes. EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN THE HISTORICAL GROWTH RATE: [PASS] The EPS growth rate for the current quarter, 20.00% must be greater than or equal to the historical growth which is 15.99%. CSH would therefore pass this test. EARNINGS PERSISTENCE: [PASS] Companies must show persistent yearly earnings growth. To fulfill this requirement a company's earnings must increase each year for a five year period. CSH, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 2.00, 2.61, 2.70, 3.17 and 3.66, passes this test. LONG-TERM EPS GROWTH: [PASS] One final earnings test required is that the long-term earnings growth rate must be at least 15% per year. CSH's long-term growth rate of 15.99%, based on the average of the 3, 4 and 5 year historical eps growth rates, passes this test. INSIDER TRANSACTIONS: [PASS] A factor that adds to a stock's attractiveness is if insider buy transactions number 3 or more, while insider sell transactions are zero. Zweig calls this an insider buy signal. For CSH, this criterion has not been met (insider sell transactions are 30, while insiders buying number 9). Despite the fact that insider sells out number insider buys for this company, Zweig considers even one insider buy transaction enough to prevent an insider sell signal, therefore there is not an insider sell signal and the stock passes this criterion.   DEVRY INC. Profile Strategy: Value Investor Based on: Benjamin Graham DeVry Inc. (DeVry) is a provider of educational services and the parent organization of Advanced Academics, Becker Professional Education, Carrington College and Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University. These institutions offer a range of programs in business, healthcare and technology and serve students in middle school through postsecondary education, as well as accounting and finance professionals. In August 2011, the Company acquired the business operations of privately held American University of the Caribbean. Analysis Guru Score: 86% SECTOR: [PASS] DV is neither a technology nor financial Company, and therefore this methodology is applicable. SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. DV's sales of $2,180.0 million, based on trailing 12 month sales, pass this test. CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. DV's current ratio of 1.18 fails the test. LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for DV is $0.0 million, while the net current assets are $82.5 million. DV passes this test. LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. DV's EPS growth over that period of 310.2% passes the EPS growth test. P/E RATIO: [PASS] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. DV's P/E of 10.50 (using the 3 year PE) passes this test. PRICE/BOOK RATIO: [PASS] The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. DV's Price/Book ratio is 1.83, while the P/E is 10.50. DV passes the Price/Book test.   Watch List The Watch List contains the highest scoring stocks according to our guru consensus system that are not currently in the Hot List portfolio. We provide this list both for informational purposes and for investors who are not comfortable with a portfolio of ten stocks. Ticker Company Name Industry Guru Score ALLT ALLOT COMMUNICATIONS LTD. Computer Services 50 ASPS ALTISOURCE PORTFOLIO SOLUTIONS S.A. Consumer Financial Services 49 TECD TECH DATA CORPORATION Computer Hardware 48 WRLD WORLD ACCEPTANCE CORP. Consumer Financial Services 48 VALE VALE (ADR) Metal Mining 48 KLIC KULICKE AND SOFFA INDUSTRIES INC. Semiconductors 46 LULU LULULEMON ATHLETICA INC. Retail (Apparel) 46 SWI SOLARWINDS, INC. Software & Programming 46 CACI CACI INTERNATIONAL INC Software & Programming 44 EXPE EXPEDIA, INC. Personal Services 44

Disclaimer

The names of individuals (i.e., the 'gurus') appearing in this report are for identification purposes of his methodology only, as derived by Validea.com from published sources, and are not intended to suggest or imply any affiliation with or endorsement or even agreement with this report personally by such gurus, or any knowledge or approval by such persons of the content of this report. All trademarks, service marks and tradenames appearing in this report are the property of their respective owners, and are likewise used for identification purposes only. Validea is not registered as a securities broker-dealer or investment advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. Validea is not responsible for trades executed by users of this site based on the information included herein. The information presented on this website does not represent a recommendation to buy or sell stocks or any financial instrument nor is it intended as an endorsement of any security or investment. The information on this website is generic by nature and is not personalized to the specific situation of any individual. The user therefore bears complete responsibility for their own investment research and should seek the advice of a qualified investment professional prior to making any investment decisions. Performance results are based on model portfolios and do not reflect actual trading. Actual performance will vary based on a variety of factors, including market conditions and trading costs. Past performance is not necessarily indicative of future results. Individual stocks mentioned throughout this web site may be holdings in the managed portfolios of Validea Capital Management, a separate asset management firm founded by Validea.com founder John Reese. Validea Capital Management, which is a separate legal entity and an SEC registered investment advisory firm, uses, in part, the strategies on the web site to select stocks for its clients.