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Executive Summary	August 28, 2015

The Economy Volatility spiked across global markets over the past two weeks, as investors worried about China's slowing growth and looming interest-rate hikes in the US. But underlying economic data at home remained fairly steady. The job market, for example, continues to look solid. New claims for unemployment have fallen slightly since our last newsletter and are now about 9% below where they were a year ago. Continuing claims, the data for which lag new claims by a week, also moved slightly lower since our last newsletter and are 10% below year-ago levels.. Service sector growth slipped a bit during August, according to the financial firm Markit. A subindex measuring new business at service companies fell to its lowest level since January, while the employment subindex rose at the same pace as July, according to CNBC. Gross domestic product rose more than previously estimated, according to the Commerce Department. It increased by 3.7%, significantly higher than the 2.3% previous estimate, and also higher than the 3.3% economists were expecting, according to MarketWatch. A big reason for the higher figure: Business investment was significantly stronger than expected, a great sign. After making a big jump in June, housing starts rose just slightly, by 0.2%, in July, according to the Census Bureau, putting them about 10% above year-ago levels. Permit issuance for new construction fell sharply by 16.3%, but is 7.5% above where it stood a year ago. A positive from the housing market: New home sales jumped 5.4% in July, according to the Census Bureau. Compared to a year ago, they are 23% higher. Median sale prices were about 2% above where they were a year ago. Inflation was tame in July. The Consumer Price Index rose just 0.1% , according to the Labor Department. That put it just 0.2% ahead of its year-ago pace, mostly because of the oil and gas price declines. But if you strip out volatile food and energy prices, so-called "core" inflation, which was up 0.1% in July, is 1.8% ahead of its year-ago pace. Oil and gas prices, meanwhile, have slid recently. As of August 27, a gallon of regular unleaded on average cost $2.53, down from $2.71 a month earlier. That's far below the year-ago level of $3.43. Overseas, China cut interest rates and banks' reserve requirements to try to boost its slowing growth, Reuters reported. Stocks responded well to the news, though that highlighted how reliant many investors seem to have become on central bank liquidity. Since our last newsletter, the S&P 500 returned -4.6%, while the Hot List returned -3.4%. So far in 2015, the portfolio has returned -4.5% vs. -3.5% for the S&P. Since its inception in July 2003, the Hot List is far outpacing the index, having gained 208.8% vs. the S&P's 98.7% gain. Vexing Indexing? The sharp declines that have occurred in the stock market over the past couple weeks have brought with them the usual conjecture about whether or not this is the end of the 6 1/2 year bull market and beginning of a new bear market. Of course, for all of the debate on that topic, no one knows for sure. I, for one, suspect that the bull has more life left in it, but that's just a guess. One highly regarded strategist says, however, that we are already in a "stealth" bear market. Mark Faber recently told CNBC that gains in broad market indexes had been driven by a small number of extremely large stocks that make up a disproportionate amount of most indices. "Indices are close to a high, but if you look at the 12-month new highs and the 12-month new lows, there are far more 12-month new lows than new highs," he said. The notion of a stealth bear market may be a bit of hyperbole. But the broader issue that Faber raises is an important one. Last year, Apple, Microsoft, Facebook, and Intel accounted for 20% of the S&P 500's gain, David Winters, another highly regarded strategist, recently told WealthTrack. Winters said that the inherent flaw in many index funds is that they are weighted by market capitalization, meaning that they tend to hold a disproportionate amount of the stocks that have performed best. The more that people buy index funds, the more that hot stocks go up, creating a cycle in which large, hot stocks get more and more overvalued. All of this means that many index funds may not quite be the great diversification tools that they appear to be, even though they may hold hundreds or thousands of stocks. Take the 5 largest stock index funds, which combined have more than $675 billion in assets under management. Three are 500-stock funds that resemble the S&P 500, while the other two have about 3,000 stocks each. All of them have the same top 10 holdings, according to data from MarketWatch and Morningstar. And, on average, those 10 stocks make up 15.5% of the 5 funds' holdings. An investor who puts a chunk of his or her portfolio into one of those index funds because they do not feel confident making big bets on individual stocks thus ends up making some pretty big bets on individual stocks -- often without realizing it. In fact, if you take a look at the holdings of the biggest index funds in terms of assets -- it's one that tracks the S&P 500 -- you get an idea of how much of an impact the "big guys" have on market-weighted indices. The 255 lowest weighted stocks in that index have portfolio weightings ranging from 0.1% to 0.01%. Combined, those 255 stocks make up a little over 14% of the portfolio -- less than the 14.6% of the portfolio that is taken up by just the 8 most heavily weighted stocks. (Fund information comes from ETF.com.) Perhaps you're thinking that the big guys should be weighted more heavily. Many S&P index fund investors are looking to get representative slice of the US economy, and a company like Apple obviously makes up a much bigger portion of the economy than a company like Diamond Offshore Drilling, which is tied for the lowest weight in the index with a weight of 0.01%. That's true. But even considering that, the index is tilted much more heavily toward the big guys than you would think. While it had about 100 times as much in 2014 earnings and about 85 times as much in trailing 12-month sales as Diamond, Apple is weighted 368 times more heavily than the offshore drilling company in the index. Now, in this particular case, I happen to think that Apple is a better stock than Diamond -- the tech giant has had a spot in the Hot List at various times this year. But that won't always be the case, and the nature of a market-weighted index fund creates a situation where you can be making a big bet on a bad stock. A Long-Term Benefit The losses that the Hot List has suffered over the past month have been disappointing, to be sure. But that's what happens when you run a concentrated portfolio. We've seen these types of short-term troubles before, and over the long term we have found that the short-term declines are a worthwhile price to pay for excellent long-term returns. In addition, I think the prevalence of S&P 500-tracking index funds may well be opening up long-term opportunities for fundamental investment strategies like the Hot List. Historically, smaller stocks have had a long history of outperformance, as I have often noted here, with one big reason being that they are less visible and less followed than bigger stocks. That means you can find some great small stocks flying under the radar. Now, with so many people piling into index funds that heavily weight the biggest firms, the small stock under-the-radar advantage should be even greater. That's because as more and more money goes into these large stocks via index funds, many may become more highly valued than their fundamentals merit -- index fund investors aren't looking at the valuation of every one of the index's holdings before they buy the fund. Smaller stocks not in the big index funds, conversely, could become even more overlooked than usual, creating big-time bargains in that space. Investors who focus on fundamentals and are willing to invest in smaller stocks should thus be able to reap the benefits over the long term. And smaller, lesser-known stocks that are not in the S&P are the types of companies that the Hot List usually keys on. If you remember, I've written previously about the portfolio's high "active share", which is a measure of how much a portfolio differs from the index it tracks. Research has shown that portfolios with high active share tend to have a better chance of beating the index. The Hot List often has very few holdings that are members of its benchmark, the S&P 500; prior to today's rebalancing, just one of its stocks (Apple) was a member of the index. Rather than going after those large stocks that everyone knows about and which are part of the major indices, the portfolio goes into areas of the market that get less attention, where mispricings of quality stocks are more likely to occur. All of this isn't to say that you should avoid index funds. I'm not even saying that you should avoid market-weighted index funds. For some investors, a market-weighted index fund may be a great fit for a portion of their portfolio. But the point here is that you need to really know what you are investing in, and how it works. During difficult times, like those we've seen in the past month, it can be tempting to throw up your hands, forgo stock-picking altogether and pile into an index fund. But if you don't know what you're getting into, you could find yourself with some unexpected problems -- and you could miss out on a lot of excellent opportunities.		Editor-in-Chief: John Reese Since Inception   Hot List 208.8% S&P 500 98.7% Accuracy 54.4% Beta 1.2 YTD   Hot List -4.5% S&P 500 -3.5% Since Last Issue   Hot List -3.4% S&P 500 -4.6% Avg. Fundamentals   Market Cap (mil) $5,332 PE Ratio 14.8 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
The Fallen As we rebalance the Validea Hot List, 7 stocks leave our portfolio. These include: Lumber Liquidators Holdings Inc (LL), Santander Consumer Usa Holdings Inc (SC), Heritage Insurance Holdings Inc (HRTG), Eagle Bancorp, Inc. (EGBN), Amtrust Financial Services Inc (AFSI), Apple Inc. (AAPL) and Jones Lang Lasalle Inc (JLL). The Keepers 3 stocks remain in the portfolio. They are: Sanderson Farms, Inc. (SAFM), Foot Locker, Inc. (FL) and Chart Industries, Inc. (GTLS). The Newbies We are adding 7 stocks to the portfolio. These include: G-iii Apparel Group, Ltd. (GIII), Universal Insurance Holdings, Inc. (UVE), Bofi Holding, Inc. (BOFI), Travelers Companies Inc (TRV), Myr Group Inc (MYRG), Forum Energy Technologies Inc (FET) and South State Corp (SSB). Portfolio Changes Additions   G-III APPAREL GROUP, LTD. GIII UNIVERSAL INSURANCE HOLDINGS, INC. UVE BOFI HOLDING, INC. BOFI TRAVELERS COMPANIES INC TRV MYR GROUP INC MYRG FORUM ENERGY TECHNOLOGIES INC FET SOUTH STATE CORP SSB Deletions   LUMBER LIQUIDATORS HOLDINGS INC LL SANTANDER CONSUMER USA HOLDINGS INC SC HERITAGE INSURANCE HOLDINGS INC HRTG EAGLE BANCORP, INC. EGBN AMTRUST FINANCIAL SERVICES INC AFSI APPLE INC. AAPL JONES LANG LASALLE INC JLL Newcomers to the Validea Hot List BofI Holding, Inc. (BOFI): BofI -- short for "Bank of Internet" -- is the holding company for BofI Federal Bank, a diversified nationwide bank that provides financing for single and multifamily residential properties, small-to-medium size businesses in target sectors, and selected specialty finance receivables. Though it has just one location -- in San Diego -- its Internet business allows it to have approximately $3.3 billion in assets and approximately 40,000 retail deposit and loan customers across all 50 states. BofI ($2 billion market cap) gets high scores from my Peter Lynch-, Martin Zweig- and Motley Fool-based models as well as my Momentum Investor approach. To read more about the stock, scroll down to the "Detailed Stock Analysis" section below. Universal Insurance Holdings, Inc. (UVE): Universal is a vertically integrated insurance holding company involved in insurance underwriting, distribution and claims. Its subsidiaries offer homeowners insurance in Florida, North Carolina, South Carolina, Hawaii, Georgia, Massachusetts and Maryland. Universal ($800 million market cap) gets strong interest from my Motley Fool-based model, inspired by an approach outlined by Fool co-creators Tom and David Gardner, as well as my Peter Lynch-based model. Scroll down to the "Detailed Stock Analysis" section to learn more about the stock. MYR Group (MYRG): This specialty contractor serves the electrical infrastructure market throughout the US and Canada. It provides services on electric transmission and distribution networks and substation facilities to customers that include investor-owned utilities, cooperatives, private developers, government-funded utilities, independent power producers, independent transmission companies, industrial facility owners and other contractors. It also provides commercial and industrial electrical contracting services to general contractors, commercial and industrial facility owners, local governments and developers generally throughout the western and northeastern US. MYR ($600 million market cap) gets strong interest from my Martin Zweig- and James O'Shaughnessy-based strategies. To read more about it, scroll down to the "Detailed Stock Analysis" section. Forum Energy Technologies, Inc. (FET) This oilfield products company ($1 billion market cap) offers 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. Forum, like many energy stocks, has been hit hard over the past year. But its attractive valuation makes it a favorite of my Kenneth Fisher- and Peter Lynch-based models. To read more about its fundamentals, check out the "Detailed Stock Analysis" section below. G-III Apparel Group (GIII): This diversified apparel company has a comprehensive portfolio of over 30 licensed and proprietary brands, including Calvin Klein, Kenneth Cole, Cole Haan, Guess?, Tommy Hilfiger, Levi's, Dockers, Jessica Simpson, Jones New York, Nine West, and G.H. Bass, among others. G-III also has licenses with the four major professional sports leagues, as well as over 100 U.S. colleges and universities. The firm also makes a range of apparel, including outerwear, dresses, sportswear, beachwear, women's suits and women's performance wear, as well as luggage and women's handbags, small leather goods and various accessories. G-III ($3 billion market cap) is a favorite of my Martin Zweig-based model. To read more about its fundamentals, check out the "Detailed Stock Analysis" section below. South State Corporation (SSB): South State provides a range of banking services and products through its subsidiary, South State Bank, which offers retail and commercial banking services, mortgage lending services, trust and investment services, and consumer finance loans. It serves customers and conducts its business from about 130 financial centers in South Carolina, North Carolina, and Georgia. South State ($2 billion market cap) gets strong interest from my Martin Zweig-based model. To read more about it, scroll down to the "Detailed Stock Analysis" section. The Travelers Companies, Inc. (TRV): Minnesota-based Travelers ($31 billion market cap) provides property casualty insurance for auto, home, and business. The 162-year-old company does business in the US, Canada, the United Kingdom, Ireland, and Brazil. Travelers gets strong interest from my Peter Lynch-, John Neff-, and James O'Shaughnessy-based strategies. To read more about it, scroll down to the "Detailed Stock Analysis" section. News about Validea Hot List Stocks Foot Locker (FL): Foot Locker said second-quarter fiscal 2015 earnings were 84 cents a share, up 31% from the previous year and ahead of the Zacks Consensus Estimate of 69 cents. Total revenue rose 3.3% to $1.7 billion, beating Zacks Consensus Estimate of $1.66 billion. Comparable-store sales were up 9.6%. 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 BOFI BOFI HOLDING, INC. Regional Banks 93 GTLS CHART INDUSTRIES, INC. Misc. Capital Goods 85 MYRG MYR GROUP INC Construction Services 83 UVE UNIVERSAL INSURANCE HOLDINGS, INC. Insurance (Prop. & Casualty) 82 TRV TRAVELERS COMPANIES INC Insurance (Prop. & Casualty) 77 SAFM SANDERSON FARMS, INC. Food Processing 76 FL FOOT LOCKER, INC. Retail (Apparel) 76 GIII G-III APPAREL GROUP, LTD. Apparel/Accessories 71 FET FORUM ENERGY TECHNOLOGIES INC Oil Well Services & Equipment 62 SSB SOUTH STATE CORP Regional Banks 56 Ticker Market Cap Date Added Start Price Current Price Return BOFI $1,900 8/28/2015 TBD $121.50 TBD GTLS $710 3/13/2015 $33.50 $23.26 -30.6% MYRG $581 8/28/2015 TBD $27.60 TBD UVE $854 8/28/2015 TBD $23.90 TBD TRV $31,556 8/28/2015 TBD $101.40 TBD SAFM $1,574 1/16/2015 $80.96 $70.24 -13.2% FL $10,006 7/31/2015 $70.55 $71.83 1.8% GIII $3,082 8/28/2015 TBD $68.51 TBD FET $1,257 8/28/2015 TBD $13.92 TBD SSB $1,804 8/28/2015 TBD $74.52 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 BOFI   |   GTLS   |   MYRG   |   UVE   |   TRV   |   SAFM   |   FL   |   GIII   |   FET   |   SSB   |   BOFI HOLDING, INC. Profile Strategy: Growth Investor Based on: Martin Zweig 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: 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. BOFI's P/E is 22.68, based on trailing 12 month earnings, while the current market PE is 19.00. 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. BOFI's revenue growth is 26.22%, while it's earnings growth rate is 27.01%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, BOFI passes this criterion. SALES GROWTH RATE: [FAIL] 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 (34.8%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (39.3%) of the current year. Sales growth for the prior must be greater than the latter. For BOFI this criterion has not been met and fails this test. 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. BOFI's EPS ($1.55) pass this test. QUARTERLY EARNINGS ONE YEAR AGO: [PASS] The EPS for the quarter one year ago must be positive. BOFI's EPS for this quarter last year ($1.09) 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. BOFI's growth rate of 42.20% 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 BOFI is 13.51%. This should be less than the growth rates for the 3 previous quarters, which are 41.18%, 36.96%, and 35.00%. BOFI 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, 37.55%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 42.20%, (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, 42.20% must be greater than or equal to the historical growth which is 27.01%. BOFI 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. BOFI, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 1.87, 2.34, 2.89, 3.85 and 5.37, 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. BOFI's long-term growth rate of 27.01%, 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 BOFI, this criterion has not been met (insider sell transactions are 179, while insiders buying number 150). 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: Price/Sales Investor Based on: Kenneth Fisher 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: 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. GTLS's P/S of 0.63 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. GTLS's Debt/Equity of 25.03% 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. GTLS 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 GTLS At this Point Is GTLS 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.GTLS's P/S ratio of 0.63 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%. GTLS's inflation adjusted EPS growth rate of 19.99% 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. GTLS's free cash per share of 1.84 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. GTLS, whose three year net profit margin averages 6.98%, passes this evaluation.   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 $581 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 82, is in the top 50 and would pass this last criterion.   UNIVERSAL INSURANCE HOLDINGS, INC. Profile Strategy: Growth Investor Based on: Martin Zweig 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: 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. UVE's P/E is 9.52, based on trailing 12 month earnings, while the current market PE is 19.00. 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. UVE's revenue growth is 13.62%, while it's earnings growth rate is 35.56%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, UVE 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 (42.1%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (39.7%) of the current year. Sales growth for the prior must be greater than the latter. For UVE 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. UVE's EPS ($0.69) pass this test. QUARTERLY EARNINGS ONE YEAR AGO: [PASS] The EPS for the quarter one year ago must be positive. UVE's EPS for this quarter last year ($0.49) 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. UVE's growth rate of 40.82% 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 UVE is 17.78%. This should be less than the growth rates for the 3 previous quarters, which are 52.50%, 37.21%, and 63.16%. UVE 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, 50.41%, (versus the same three quarters a year earlier) is greater than the growth rate of the current quarter earnings, 40.82%, (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 UVE is 40.8%, 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, 40.82% must be greater than or equal to the historical growth which is 35.56%. UVE 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. UVE, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 0.92, 0.50, 0.74, 1.56, and 2.08, 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. UVE's long-term growth rate of 35.56%, 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 UVE, this criterion has not been met (insider sell transactions are 162, while insiders buying number 49). 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.   TRAVELERS COMPANIES INC Profile Strategy: Growth/Value Investor Based on: James P. O'Shaughnessy 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: 75% 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. TRV, with a market cap of $31,556 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. TRV, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 2.37, 2.56, 2.94, 3.06 and 4.20, 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. TRV's Price/Sales ratio of 1.17, based on trailing 12 month sales, passes this criterion. RELATIVE STRENGTH: [FAIL] 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. TRV has a relative strength of 74. This does not pass the final criterion. As a result, this methodology would not consider the stock even though it passed the previous three criteria.   SANDERSON FARMS, INC. Profile Strategy: P/E/Growth Investor Based on: Peter Lynch 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: 93% DETERMINE THE CLASSIFICATION: SAFM is considered a "True Stalwart", according to this methodology, as its earnings growth of 18.92% lies within a moderate 10%-19% range and its annual sales of $2,885 million are greater than the multi billion dollar level. This methodology looks for the "Stalwart" securities to gain 30%-50% in value over a two year period if they can be purchased at an attractive price based on the P/E to Growth ratio. SAFM is attractive if SAFM can hold its own during a recession. 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 SAFM was 7.67% last year, while for this year it is 6.88%. Since inventory to sales has decreased from last year by -0.80%, SAFM passes this test. YIELD ADJUSTED P/E TO GROWTH (PEG) RATIO: [PASS] The Yield-adjusted P/E/G ratio for SAFM (0.28), based on the average of the 4 and 5 year historical eps growth rates, is excellent. EARNINGS PER SHARE: [PASS] The EPS for a stalwart company must be positive. SAFM's EPS ($12.38) would satisfy this criterion. TOTAL DEBT/EQUITY RATIO: [PASS] This methodology would consider the Debt/Equity ratio for SAFM (0.98%) to be exceptionally low (equity is at least 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 SAFM (6.62%) 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 SAFM (10.72%) 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.   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.   G-III APPAREL GROUP, LTD. Profile Strategy: Growth Investor Based on: Martin Zweig 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: 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. GIII's P/E is 27.04, based on trailing 12 month earnings, while the current market PE is 19.00. 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. GIII's revenue growth is 19.94%, while it's earnings growth rate is 20.93%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, GIII 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 (18.2%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (8.8%) of the current year. Sales growth for the prior must be greater than the latter. For GIII 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. GIII's EPS ($0.15) pass this test. QUARTERLY EARNINGS ONE YEAR AGO: [PASS] The EPS for the quarter one year ago must be positive. GIII's EPS for this quarter last year ($0.03) 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. GIII's growth rate of 400.00% 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 GIII is 10.47%. This should be less than the growth rates for the 3 previous quarters, which are 27.27%, 23.94%, and 54.84%. GIII 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, 29.35%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 400.00%, (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, 400.00% must be greater than or equal to the historical growth which is 20.93%. GIII 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. GIII, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 1.44, 1.23, 1.40, 1.85, and 2.48, 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. GIII's long-term growth rate of 20.93%, based on the average of the 3, 4 and 5 year historical eps growth rates, passes this test. TOTAL DEBT/EQUITY RATIO: [PASS] A final criterion is that a company must not have a high level of debt. A high level of total debt, due to high interest expenses, can have a very negative effect on earnings if business moderately turns down. If a company does have a high level, an investor may want to avoid this stock altogether. GIII's Debt/Equity (0.00%) is not considered high relative to its industry (41.19%) and 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 GIII, this criterion has not been met (insider sell transactions are 194, while insiders buying number 60). 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.   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 9.66 (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 0.88, while the P/E is 9.66. FET passes the Price/Book test.   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 20.19, based on trailing 12 month earnings, while the current market PE is 19.00. 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 358). Despite the lack of an insider buy signal, there also is not an insider sell signal, so the stock passes this criterion.   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 GILD GILEAD SCIENCES, INC. Biotechnology & Drugs 67 EGBN EAGLE BANCORP, INC. Regional Banks 57 DDC DOMINION DIAMOND CORP Non-Metallic Mining 56 FNBC FIRST NBC BANK HOLDING COMPANY Regional Banks 56 PII POLARIS INDUSTRIES INC. Recreational Products 54 JLL JONES LANG LASALLE INC Real Estate Operations 53 AAPL APPLE INC. Communications Equipment 51 PNFP PINNACLE FINANCIAL PARTNERS Regional Banks 51 WETF WISDOMTREE INVESTMENTS, INC. Investment Services 51 OXM OXFORD INDUSTRIES INC Apparel/Accessories 49

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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.