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Executive Summary	September 11, 2015

The Economy After a couple of wild weeks, stocks have begun to stabilize, with solid economic data supporting the rebound in the market. The economy added 173,000 jobs during August, the Labor Department said, with the unemployment rate falling to 5.1%, the lowest it has been since March 2008. The broader "U-6" unemployment rate (which unlike the headline number takes into account those working part-time who want full-time work, and discouraged workers who have given up looking for a job) fell to 10.3%, the lowest it has been since June 2008. Average hourly wages rose at a 3.8% annualized rate vs. July, and average weekly wages jumped at a 7.3% annualized pace, as hours worked per week also edged higher. Good news came from the service sector, which expanded in August for the 67th straight month, according to the Institute for Supply Management. The rate of expansion wasn't quite as high as July's record pace, but it was still quite impressive. New orders remained very high, as did the employment sub-index. The manufacturing sector, meanwhile, expanded for the 32nd straight month, according to ISM, though it did so at the slowest pace in more than two years. Growth in the new orders and employment sub-indexes also slowed but remained positive. Customer inventories increased sharply, a negative sign that bears watching. Personal income jumped 0.4% in July, according to the Commerce Department.. Real disposable personal income rose 0.4%, while real personal consumption expenditures rose 0.2%. That meant the personal savings rate moved higher to 4.9%, from 4.7%. Gas prices continue to fall. A gallon of regular unleaded on average cost $2.39 as of September 8, down from $2.61 a month earlier, according to AAA. That's about 30% below where it was a year ago. While the causes of the gas price declines over the past year have mixed implications -- some is due to excessive supply created by fracking, while some is due to China's slowdown -- lower gas prices should continue to help most American businesses. Since our last newsletter, the S&P 500 returned -1.8%, while the Hot List returned -0.7%. So far in 2015, the portfolio has returned -5.2% vs. -5.2% for the S&P. Since its inception in July 2003, the Hot List is far outpacing the index, having gained 206.6% vs. the S&P's 95.1% gain. Portfolio Update While August was a rough month for the Hot List, the portfolio has been rebounding nicely over the past couple weeks. Since our last newsletter, five of our holdings have been in the black and five have been in the red, but the winners have outweighed the losers in magnitude. (Performance data as of afternoon trading on September 10.) The biggest winner of the fortnight has been Universal Insurance Holdings, the small-cap insurer that offers homeowners insurance in Florida, North Carolina, South Carolina, Hawaii, Georgia, Massachusetts and Maryland. Shares of the UVE have surged 11.6%. The stock had been hit harder than the broader market during the August declines, so the gains over the past two weeks may have been in part a bounce back after investors realized the stock was hit too hard. But the firm also announced a $10 million program to buy back its shares, which runs through the end of 2016, and that likely helped to boost shares as well. Another nice winter was Forum Energy Technologies, which was up more than 3%. The oil and gas services firm was likely helped by the recent increase in oil prices. On the downside were a pair of firms that announced earnings. Sanderson Farms fell about 3% after it reported a profit of $50.9 million, or $2.27 a share, down from $76.1 million, or $3.30 a share, a year ago. Revenues fell 3.7% to $739.9 million. Analysts anticipated $2.90 in per-share earnings and $750.9 million in sales, according to Thomson Reuters. The poultry producer's disappointing results were attributable to sharply lower chicken prices, The Wall Street Journal reported. G-III Apparel Group, also fell about 3%. It reported fiscal second-quarter earnings of $12.5 million, or 27 cents per share. That beat analysts' estimates of 20 cents per share, according to Zacks Investment Research. Revenue was $473.9 million, topping estimates of $470.6 million. G-III also raised its full-year earnings guidance. Still, for whatever reason the generally positive news didn't translate into gains for the stock. Overall, the performance of both the Hot List and the broader market were encouraging over the past two weeks. Hopefully the rough waters we sailed through in August have passed. We'll check back in again in two weeks, at which time we will rebalance the portfolio.		Editor-in-Chief: John Reese Since Inception   Hot List 206.6% S&P 500 95.1% Accuracy 54.3% Beta 1.2 YTD   Hot List -5.2% S&P 500 -5.2% Since Last Issue   Hot List -0.7% S&P 500 -1.8% Avg. Fundamentals   Market Cap (mil) $5,254 PE Ratio 14.6 5 Yr EPS Growth 26.5% Yield 0.8% Rel. Strength 69 Portfolio Sectors Financial 4 Capital Goods 2 Consumer Cyclical 1 Consumer/Non-Cyclical 1 Energy 1 Services 1
Guru Spotlight: Benjamin Graham If you are an aficionado of value investing and Warren Buffett, you probably know that one of the biggest influences on Buffett's life was the great Benjamin Graham. Known as the "Father of Value Investing", Graham essentially invented the field of security analysis, and became Buffett's mentor while he was teaching young Warren at Columbia University. But while he had a huge impact on Buffett, Graham inspired a number of other investors -- and a remarkable number of his pupils went on to great success. In a 1984 speech he gave at Columbia University entitled "The Superinvestors of Graham-and-Doddsville", Buffett examined the remarkable track records of a group of investors who studied under Graham. He explained that from 1954 to 1956, there were four "peasant level" employees working under Graham at the Graham-Newman Corporation (David Dodd and Jerome Newman were among the firm's other directors). Three of those "peasants" (Walter Schloss, Tom Knapp, and Buffett himself) established easily traceable track records after leaving the firm, Buffett said -- and all of those track records were tremendous: Schloss: Gained 16.1% and 21.3% annualized at two partnerships over a 28-year period, vs. 8.4% for the S&P Knapp: Gained 20% and 16% annualized at two funds over a 15-year period, vs. 7.0% for the S&P. Buffett (pre-Berkshire): Annualized returns of 29.5% and 23.8% at two partnerships over a 13-year period, vs. 7.4% for the S&P. (Data from Buffett's speech, available in the revised version of Graham's The Intelligent Investor) Of course, that doesn't even include the exceptional returns Buffett has generated at Berkshire Hathaway over the past three-plus decades. What's more, he, Schloss, and Knapp weren't the only highly successful Graham/Dodd/Newman disciples. Bill Ruane, Charlie Munger, John Templeton, John Neff -- all of these gurus and others worked under or learned from Graham and company. Buffett's conclusion: "A concentration of winners that simply cannot be explained by chance can be traced to this particular intellectual village." In other words, the results show that Graham-style value investing works. It's hard to argue the point, and my success with Graham's strategy only bolsters the already impressive case. Since mid-2003, my 10-stock Graham-based portfolio has returned 9.5% annualized vs. 5.6% for the S&P, while the 20-stock version has returned 10.2% annualized. Today, one might think that our high-tech world has made it harder for value investing to work, because information is now so easily accessible. In Graham's day, it took a lot of legwork and effort to analyze even one company's financials and fundamentals. But those who had the time, desire, and initiative to find and crunch the numbers could get a huge leg up on others. Today, the Internet gives us financial and fundamental information on thousands of stocks with just a few mouse clicks. Finding a company with a strong return on equity, low debt, and dirt-cheap shares is something that just about anyone can do, and do quite easily. In theory, that should make an approach like Graham's stop working. If it's known that good value strategies do well over time, and it's easy to find good value stocks, those stocks should be available at cheap prices for just a blink of an eye before everyone piles into them. But, ironically, the same technological forces that have helped made it easier to find good value stocks have made it harder to stick with those stocks. Turn on the TV, pop open your laptop, click on your phone -- all of them give you a front row seat to every up and down of every stock in your portfolio. Because we humans are emotional creatures, many, if not most, investors end up acting on those short-term ups and downs far more than they should, selling goods stocks that have had a bad day, or buying hot stocks that have had a good day, without regard to what truly matters: what those shares are really worth. For disciplined investors, that's a good thing. When others bail on good stocks that are having short-term dips, those focused on the long term can swoop in and pick up the bargains left behind. It's hard to do, because in the short term your portfolio can include some very unloved, declining stocks. But, as Graham, Buffett, and other "superinvestors" have shown, over the long haul value and fundamentals win out. Stay disciplined, and you tilt the odds greatly in your favor. News about Validea Hot List Stocks G-III Apparel Group (GIII): G-III reported fiscal second-quarter earnings of $12.5 million, or 27 cents per share. That beat analysts estimates of 20 cents per share, according to Zacks Investment Research. Revenue was $473.9 million, topping estimates of $470.6 million. G-III also raised its full-year earnings guidance. Still, for whatever reason the generally positive news didn't translate into gains for the stock, which fell about 3%. Sanderson Farms (SAFM): Sanderson reported a profit of $50.9 million, or $2.27 a share, down from $76.1 million, or $3.30 a share, a year earlier. Revenue slipped 3.7% to $739.9 million. Analysts anticipated $2.90 in per-share earnings and $750.9 million in sales, according to Thomson Reuters. The Next Issue In two weeks, we will publish another issue of the Hot List, at which time we will rebalance the portfolio. If you have any questions, please feel free to contact us at hotlist@validea.com.

Current Portfolio Ticker Company Name Industry Guru Score FL FOOT LOCKER, INC. Retail (Apparel) 100 BOFI BOFI HOLDING, INC. Regional Banks 95 UVE UNIVERSAL INSURANCE HOLDINGS, INC. Insurance (Prop. & Casualty) 84 MYRG MYR GROUP INC Construction Services 82 TRV TRAVELERS COMPANIES INC Insurance (Prop. & Casualty) 79 GTLS CHART INDUSTRIES, INC. Misc. Capital Goods 78 SSB SOUTH STATE CORP Regional Banks 62 SAFM SANDERSON FARMS, INC. Food Processing 61 FET FORUM ENERGY TECHNOLOGIES INC Oil Well Services & Equipment 24 GIII G-III APPAREL GROUP, LTD. Apparel/Accessories 22 Ticker Market Cap Date Added Start Price Current Price Return FL $9,985 7/31/2015 $70.55 $71.64 1.5% BOFI $1,846 8/28/2015 $117.62 $118.00 0.3% UVE $954 8/28/2015 $24.08 $26.70 10.9% MYRG $578 8/28/2015 $28.25 $27.49 -2.7% TRV $30,837 8/28/2015 $100.43 $99.09 -1.3% GTLS $691 3/13/2015 $33.50 $22.61 -32.5% SSB $1,829 8/28/2015 $74.37 $75.57 1.6% SAFM $1,518 1/16/2015 $80.96 $67.73 -16.3% FET $1,303 8/28/2015 $14.79 $14.43 -2.4% GIII $2,999 8/28/2015 $68.14 $66.32 -2.7%

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 FL   |   BOFI   |   UVE   |   MYRG   |   TRV   |   GTLS   |   SSB   |   SAFM   |   FET   |   GIII   |   FOOT LOCKER, INC. Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher Foot Locker, Inc. is a retailer of shoes and apparel. The Company operates in two segments: Athletic Stores and Direct-to-Customers. The Athletic Stores segment is an athletic footwear and apparel retailer whose formats include Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports, Footaction and SIX:02, as well as the retail stores of Runners Point Group, including Runners Point and Sidestep. The Direct-to-Customers segment includes Footlocker.com, Inc. and other affiliates, including Eastbay, Inc., and the direct-to-customer subsidiary of Runners Point Group, which sell to customers through their Internet and mobile sites and catalogs. As of January 31, 2015, the Company operated 3,423 primarily mall-based stores in the United States, Canada, Europe, Australia and New Zealand. As of January 31, 2015, the Company operated a total of 78 franchised stores, of which 31 are in the Middle East, 27 in Germany and Switzerland, and 20 in the Republic of Korea. Analysis Guru Score: 90% PRICE/SALES RATIO: [PASS] The prospective company should have a low Price/Sales ratio. Non-cyclical (non-Smokestack) companies with Price/Sales ratio between .75 and 1.5 are good values. FL's P/S ratio of 1.38 based on trailing 12 month sales, falls within the "good values" range for non-cyclical companies and is considered attractive. TOTAL DEBT/EQUITY RATIO: [PASS] Less debt equals less risk according to this methodology. FL's Debt/Equity of 5.12% 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. FL 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 FL At this Point Is FL a "Super Stock"? NO PRICE/SALES RATIO: [FAIL] The prospective company should have a low Price/Sales ratio. To be considered a "Super Stock", non-cyclical (non-Smokestack) companies should have Price/Sales ratios below .75. However, FL, who has a P/S of 1.38, does not fall within the "Super Stock" range. It does fall between 0.75 and 1.5, which is considered the "good values" range for non-cyclical companies. Nonetheless, it does not pass this "Super Stock" criterion. LONG-TERM EPS GROWTH RATE: [PASS] This methodology looks for companies that have an inflation adjusted EPS growth rate greater than 15%. FL's inflation adjusted EPS growth rate of 39.01% 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. FL's free cash per share of 2.70 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. FL, whose three year net profit margin averages 6.76%, passes this evaluation.   BOFI HOLDING, INC. Profile Strategy: P/E/Growth Investor Based on: Peter Lynch BofI HOLDING, INC., is the holding company for BofI Federal Bank. The Bank has deposit and loan customers nationwide including consumer and business checking, savings and time deposit accounts and financing for single family and multifamily residential properties, small-to-medium size businesses in target sectors, and selected specialty finance receivables. The Bank provides consumer and business banking products through the branchless distribution channels and affinity partners. The Bank's deposit products are demand accounts, savings accounts and time deposits marketed to consumers and businesses located in all 50 states. The Bank's primary lending products are residential single family and multifamily mortgage loans. The Bank's business is primarily concentrated in the state of California and is subject to the general economic conditions of that state. Analysis Guru Score: 91% DETERMINE THE CLASSIFICATION: This methodology would consider BOFI a "fast-grower". P/E/GROWTH RATIO: [PASS] The investor should examine the P/E (22.03) relative to the growth rate (27.01%), 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 BOFI (0.82) makes it favorable. SALES AND P/E RATIO: [NEUTRAL] 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 rate high enough to support a P/E above this threshold. BOFI, whose sales are $244.4 million, is not considered large enough to apply the P/E ratio analysis. However, an investor can analyze the P/E ratio relative to the EPS growth rate. 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 BOFI is 27.0%, based on the average of the 3, 4 and 5 year historical eps growth rates, which is acceptable. TOTAL DEBT/EQUITY RATIO: [NEUTRAL] BOFI is a financial company so debt to equity rules are not applied to determine the company's financial soundness. EQUITY/ASSETS RATIO: [PASS] This methodology uses the Equity/Assets Ratio as a way to determine a financial intermediary's health, as it is a better measure than the Debt/Equity Ratio. BOFI's Equity/Assets ratio (9.00%) is healthy and above the minimum 5% this methodology looks for, thus passing the criterion. RETURN ON ASSETS: [PASS] This methodology uses Return on Assets as a way to measure a financial intermediary's profitability. BOFI's ROA (1.62%) is above the minimum 1% that this methodology looks for, thus passing the criterion. 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 BOFI (6.11%) 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 BOFI (11.80%) 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.   UNIVERSAL INSURANCE HOLDINGS, INC. Profile Strategy: P/E/Growth Investor Based on: Peter Lynch Universal Insurance Holdings, Inc. (UIH), with its wholly owned subsidiaries, is a vertically integrated insurance holding company performing all aspects of insurance underwriting, distribution and claims. The Company's offers homeowners' insurance through the Insurance Entities, Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC). Substantially all aspects of insurance underwriting, distribution and claims processing are performed by the Company's subsidiaries. UPCIC, a wholly owned subsidiary of the Company, is a writer of homeowners insurance in Florida and has commenced its operations in North Carolina, South Carolina, Hawaii, Georgia, Massachusetts, Maryland, Delaware, and Indiana. APPCIC, also a wholly owned subsidiary, writes homeowners multi-peril insurance on Florida homes valued in excess of $1 million, which are limits and coverages currently not targeted through its affiliate UPCIC. Analysis Guru Score: 93% DETERMINE THE CLASSIFICATION: This methodology would consider UVE a "fast-grower". P/E/GROWTH RATIO: [PASS] The investor should examine the P/E (10.63) relative to the growth rate (35.56%), 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 UVE (0.30) is very favorable. SALES AND P/E RATIO: [NEUTRAL] 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 rate high enough to support a P/E above this threshold. UVE, whose sales are $435.4 million, is not considered large enough to apply the P/E ratio analysis. However, an investor can analyze the P/E ratio relative to the EPS growth rate. 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 UVE is 35.6%, 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: [NEUTRAL] UVE is a financial company so debt to equity rules are not applied to determine the company's financial soundness. EQUITY/ASSETS RATIO: [PASS] This methodology uses the Equity/Assets Ratio as a way to determine a financial intermediary's health, as it is a better measure than the Debt/Equity Ratio. UVE's Equity/Assets ratio (24.00%) is extremely healthy and above the minimum 5% this methodology looks for, thus passing the criterion. RETURN ON ASSETS: [PASS] This methodology uses Return on Assets as a way to measure a financial intermediary's profitability. UVE's ROA (8.94%) is above the minimum 1% that this methodology looks for, thus passing the criterion. 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 UVE (10.11%) 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 UVE (9.45%) 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.   MYR GROUP INC Profile Strategy: Growth/Value Investor Based on: James P. O'Shaughnessy MYR Group Inc. is a holding company, which provides specialty electrical construction services through its subsidiaries. The Company performs construction services in two business segments: Transmission and Distribution (T&D), and Commercial and Industrial (C&I). T&D segment provides solutions to customers in the electric utility industry and the renewable energy industry. The Company also provides C&I electrical contracting services to property owners and general contractors in the western United States. The Company's wholly owned subsidiaries include The L. E. Myers Co., Harlan Electric Company, Hawkeye Construction, Inc., Great Southwestern Construction, Inc., Sturgeon Electric Company, Inc., MYR Transmission Services, Inc., MYR Group Construction Canada, Ltd., MYR Transmission Services Canada, Ltd. and Northern Transmission Services, Ltd. The Company also provides electrical construction services, and limited gas construction services. 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. MYRG, with a market cap of $578 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. MYRG, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 0.55, 0.62, 0.87, 1.20 and 1.34, 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. MYRG's Price/Sales ratio of 0.57, 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. MYRG, whose relative strength is 81, is in the top 50 and would pass this last criterion.   TRAVELERS COMPANIES INC Profile Strategy: Growth Investor Based on: Martin Zweig The Travelers Companies, Inc. is a holding company. Through its subsidiaries, the Company is engaged in providing a range of commercial and personal property and casualty insurance products and services to businesses, Government units, associations and individuals. The Company has three operating segments: Business and International Insurance segment, Bond & Specialty Insurance segment and the Personal Insurance segment. Business and International Insurance segment offers a range of property and casualty insurance and insurance related services to its customers, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world. Bond & Specialty Insurance segment provides surety, crime, management and professional liability coverages, and related risk management services. Personal Insurance segment includes a range of property and casualty insurance covering individuals' personal risks. Analysis Guru Score: 85% 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. TRV's P/E is 9.08, based on trailing 12 month earnings, while the current market PE is 18.00. Therefore, it passes the first test. REVENUE GROWTH IN RELATION TO EPS GROWTH: [FAIL] 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. TRV's revenue growth is 10.52%, while it's earnings growth rate is 16.57%, based on the average of the 3 and 4 year historical eps growth rates. Therefore, TRV fails 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 (334.6%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (-4.9%) of the current year. Sales growth for the prior must be greater than the latter. For TRV 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. TRV's EPS ($2.54) pass this test. QUARTERLY EARNINGS ONE YEAR AGO: [PASS] The EPS for the quarter one year ago must be positive. TRV's EPS for this quarter last year ($1.01) 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. TRV's growth rate of 151.49% passes this test. EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: [FAIL] Compare the earnings growth rate of the past four quarters with long-term EPS growth rate. Earnings growth in the past 4 quarters should be at least half of the long-term EPS growth rate. A stock should not be considered if it posted several quarters of skimpy earnings. TRV had 3 quarters of skimpy growth in the last 2 years. 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, -107.12%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 151.49%, (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, 151.49% must be greater than or equal to the historical growth which is 16.57%. TRV 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. TRV, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 2.37, 2.56, 2.94, 3.06 and 4.20, 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. TRV's long-term growth rate of 16.57%, based on the average of the 3 and 4 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 TRV, this criterion has not been met (insider sell transactions are 539, while insiders buying number 436). 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.   CHART INDUSTRIES, INC. Profile Strategy: P/E/Growth Investor Based on: Peter Lynch Chart Industries, Inc. (Chart) is a diversified manufacturer of engineered equipment engineered equipment for the industrial gas, energy, and biomedical industries. The Company's equipment and engineered systems are used for low-temperature and cryogenic applications. It operates through three segments: Energy & Chemicals (E&C), Distribution & Storage (D&S) and BioMedical. Its products include vacuum insulated containment vessels, heat exchangers, cold boxes and other cryogenic components. Its E&C and D&S segments manufacture products used in energy-related and industrial applications, such as the separation, liquefaction, distribution and storage of hydrocarbon and industrial gases. Through its BioMedical segment, it supplies cryogenic and other equipment used in the medical, biological research and animal breeding industries. The Company, through Thermax, Inc., provides cryogenic fluid vaporizers utilized in industrial gas, petro-chemical and liquefied natural gas applications. Analysis Guru Score: 93% DETERMINE THE CLASSIFICATION: This methodology would consider GTLS a "fast-grower". P/E/GROWTH RATIO: [PASS] The investor should examine the P/E (9.62) relative to the growth rate (22.31%), 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 GTLS (0.43) 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. GTLS, whose sales are $1,135.3 million, needs to have a P/E below 40 to pass this criterion. GTLS's P/E of (9.62) is considered acceptable. INVENTORY TO SALES: [PASS] When inventories increase faster than sales, it is a red flag. However an increase of up to 5% is considered bearable if all other ratios appear attractive. Inventory to sales for GTLS was 18.09% last year, while for this year it is 18.08%. Since inventory to sales has not changed appreciably, GTLS passes this test. 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 GTLS is 22.3%, based on the average of the 3, 4 and 5 year historical eps growth rates, which is considered very good. TOTAL DEBT/EQUITY RATIO: [PASS] This methodology would consider the Debt/Equity ratio for GTLS (25.03%) to be acceptable (equity is three to ten times debt). This ratio is one quick way to determine the financial strength of the company. 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 GTLS (8.14%) 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 GTLS (-15.14%) 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.   SOUTH STATE CORP Profile Strategy: Growth Investor Based on: Martin Zweig South State Corporation (South State), formerly First Financial Holdings, Inc. is a bank holding company. The Company provides a range of banking services and products to its customers through its wholly owned bank subsidiary, South State Bank (the Bank), formerly SCBT, a South Carolina-chartered commercial bank. The Bank provides a range of retail and commercial banking services, mortgage lending services, trust and investment services, and consumer finance loans. As at December 31, 2014, the Company had approximately $7.8 billion in assets, $5.7 billion in loans, $6.5 billion in deposits, $984.9 million in shareholders' equity and a market capitalization of approximately $1.6 billion. The Company serves customers and conducts its business from 127 financial centers in 19 South Carolina counties, four North Carolina counties, ten northeast Georgia counties and two coastal Georgia counties. 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. SSB's P/E is 20.48, based on trailing 12 month earnings, while the current market PE is 18.00. 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. SSB's revenue growth is 22.19%, while it's earnings growth rate is 16.83%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, SSB 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 (-0.1%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (-3.8%) of the current year. Sales growth for the prior must be greater than the latter. For SSB 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. SSB's EPS ($1.02) pass this test. QUARTERLY EARNINGS ONE YEAR AGO: [PASS] The EPS for the quarter one year ago must be positive. SSB's EPS for this quarter last year ($0.74) 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. SSB's growth rate of 37.84% passes this test. EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: [PASS] 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 SSB is 8.41%. This should be less than the growth rates for the 3 previous quarters, which are 53.85%, 60.00%, and 50.00%. SSB passes this test, which means that it has 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, 54.34%, (versus the same three quarters a year earlier) is greater than the growth rate of the current quarter earnings, 37.84%, (versus the same quarter one year ago) then the stock fails, with one exception: if the growth rate in earnings between the current quarter and the same quarter one year ago is greater than 30%, then the stock would pass. The growth rate over this period for SSB is 37.8%, and it would therefore pass this test. EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN THE HISTORICAL GROWTH RATE: [PASS] The EPS growth rate for the current quarter, 37.84% must be greater than or equal to the historical growth which is 16.83%. SSB would therefore pass this test. EARNINGS PERSISTENCE: [FAIL] Companies must show persistent yearly earnings growth. To fulfill this requirement a company's earnings must increase each year for a five year period. SSB, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 4.08, 1.64, 2.03, 2.38, and 3.08, fails 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. SSB's long-term growth rate of 16.83%, 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 SSB, this criterion has not been met (insider sell transactions are 157, while insiders buying number 360). Despite the lack of an insider buy signal, there also is not an insider sell signal, so the stock passes this criterion.   SANDERSON FARMS, INC. Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher Sanderson Farms, Inc. is a poultry processing company which is engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared chicken items. In addition, the Company is engaged in the processing, marketing and distribution of prepared chicken through its wholly owned subsidiary, Sanderson Farms, Inc. (Foods Division). It produces a range of processed chicken products and prepared chicken items. It sells ice pack, chill pack, bulk pack and frozen chicken, in whole, cut-up and boneless form, under the Sanderson Farms brand name to retailers, distributors, and casual dining operators in the south-eastern, south-western, north-eastern and western United States and to customers who resell frozen chicken into export markets. During the fiscal year ended October 31, 2013 (fiscal 2013), it processed 452 million chickens, or over 3.0 billion dressed pounds. 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. SAFM'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. SAFM's Debt/Equity of 0.98% 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. SAFM 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 SAFM At this Point Is SAFM 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.SAFM'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%. SAFM's inflation adjusted EPS growth rate of 16.60% 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. SAFM's free cash per share of 4.65 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. SAFM, whose three year net profit margin averages 5.37%, passes this evaluation.   FORUM ENERGY TECHNOLOGIES INC Profile Strategy: Value Investor Based on: Benjamin Graham Forum Energy Technologies, Inc. is an oilfield products company. The Company designs, manufactures and distributes products and engages in aftermarket services, parts supply and related services. Its product offering includes a mix of engineered capital products and replaced items that are used in the exploration, development, production and transportation of oil and natural gas. Its capital products are targeted at drilling rig equipment for rigs, upgrades and refurbishment projects; subsea construction and development projects; the placement of production equipment on producing wells, and downstream capital projects. Its engineered systems are components used on drilling rigs or in the course of subsea operations, while its consumable products are used to maintain operations at well sites in the well construction process, within the supporting infrastructure and at processing centers and refineries. Its segments are Drilling & Subsea and Production & Infrastructure. Analysis Guru Score: 86% SECTOR: [PASS] FET 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. FET's sales of $1,540.0 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. FET's current ratio of 3.99 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 FET is $437.7 million, while the net current assets are $645.5 million. FET 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 FET 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. FET's P/E of 10.01 (using the current 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. FET's Price/Book ratio is 0.91, while the P/E is 10.01. FET passes the Price/Book test.   G-III APPAREL GROUP, LTD. Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher G-III Apparel Group, Ltd. designs, manufactures, and markets a range of apparel products. The Company's apparel products include outerwear, dresses, sportswear, swimwear, women's suits and women's performance wear, as well as footwear, luggage and women's handbags, small leather goods and cold weather accessories. The Company operates through three segments, Licensed Products, Non-Licensed Products, and Retail Operations. The Licensed products segment includes sales of products under brands licensed by the Company from third parties. The Non-licensed products segment includes sales of products under its own brands and under private label brands. The retail operations segment consists primarily of its Wilsons Leather and G.H. Bass stores, as well as Calvin Klein Performance stores. Analysis Guru Score: 80% PRICE/SALES RATIO: [PASS] The prospective company should have a low Price/Sales ratio. Non-cyclical (non-Smokestack) companies with Price/Sales ratio between .75 and 1.5 are good values. GIII's P/S ratio of 1.34 based on trailing 12 month sales, falls within the "good values" range for non-cyclical companies and is considered attractive. TOTAL DEBT/EQUITY RATIO: [PASS] Less debt equals less risk according to this methodology. GIII's Debt/Equity of 0.70% 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. GIII 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 GIII At this Point Is GIII a "Super Stock"? NO PRICE/SALES RATIO: [FAIL] The prospective company should have a low Price/Sales ratio. To be considered a "Super Stock", non-cyclical (non-Smokestack) companies should have Price/Sales ratios below .75. However, GIII, who has a P/S of 1.34, does not fall within the "Super Stock" range. It does fall between 0.75 and 1.5, which is considered the "good values" range for non-cyclical companies. Nonetheless, it does not pass this "Super Stock" criterion. LONG-TERM EPS GROWTH RATE: [PASS] This methodology looks for companies that have an inflation adjusted EPS growth rate greater than 15%. GIII's inflation adjusted EPS growth rate of 18.61% 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. GIII's free cash per share of 0.88 passes this criterion. THREE YEAR AVERAGE NET PROFIT MARGIN: [FAIL] This methodology looks for companies that have an average net profit margin of 5% or greater over a three year period. GIII, whose three year net profit margin averages 4.59%, fails this evaluation.   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 AAPL APPLE INC. Communications Equipment 65 VLO VALERO ENERGY CORPORATION Oil & Gas Operations 61 EGBN EAGLE BANCORP, INC. Regional Banks 57 FNBC FIRST NBC BANK HOLDING COMPANY Regional Banks 55 PII POLARIS INDUSTRIES INC. Recreational Products 54 HRTG HERITAGE INSURANCE HOLDINGS INC Insurance (Prop. & Casualty) 53 WETF WISDOMTREE INVESTMENTS, INC. Investment Services 51 AFSI AMTRUST FINANCIAL SERVICES INC Insurance (Prop. & Casualty) 51 JLL JONES LANG LASALLE INC Real Estate Operations 50 GPS GAP INC Retail (Apparel) 46

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