Executive Summary  |   Portfolio  |   Guru Analysis  |   Watch List

Executive Summary	October 14, 2011

The Economy The U.S. economic news remains much the same as it has for the past several weeks, with the picture being one of slow but continuing growth. Of course, few seem to care about that, with most investors continuing to act based on one thing and one thing only: the European debt crisis. This past week, the news was hopeful from Europe, and the market responded with some big upward moves. Slovakia, which had been the lone Eurozone country blocking a broader rescue plan, appeared to be moving toward an agreement that would allow the plan to go through. And the European Commission president offered a plan that would lower debt for Greece, the country at the center of all the debt hubbub, and help strengthen European banks. Of course, the Europe situation is fraught with speculation about how the U.S. will be impacted by the overseas troubles. As for the real facts and data, they continue to show that -- despite all the Europe fears -- the U.S. economy is continuing to muddle through. And, frankly, that's a lot better than many have been predicting. Manufacturing activity increased in September for the 26th straight month, according to the Institute for Supply Management, and, while the pace was relatively slow, it was slightly faster than it was in August. The new orders sub-index was in contraction territory for the third straight month, however, and the backlog of orders sub-index fell to its lowest point since April 2009. That means next month's manufacturing numbers should be watched closely. The service sector also expanded (for the 22nd straight month), according to ISM. And its new orders and backlog of orders sub-indices both made fairly large jumps, very good signs given how much of a role the service sector plays in the U.S. economy. As for the labor market, we continue to see some job growth, but not enough to dent the unemployment rate, which stayed at a troublingly high 9.1% for the third straight month. The private sector added 137,000 jobs in September, according to the latest Labor Department data, while the government cut 34,000 jobs. The so-called "U-6" unemployment rate -- which also includes those working part-time because they can't find full-time work, and discouraged workers who've stopped looking for jobs -- increased to its highest level since last December. The latest weekly claims numbers paint a similar picture. New claims for unemployment have remained right around the 400,000 mark for the past three weeks. That's about 13% below where we were a year ago, but still not low enough to indicate that the labor market is healthy. With investors focused mostly on Europe, the S&P 500 has returned 3.7% since our last newsletter, while the Hot List has returned 4.5%. So far in 2011, the portfolio has returned -18.8% vs. -4.3% for the S&P. Since its inception in July 2003, the Hot List is far outpacing the index, having gained 119.2% vs. the S&P's 20.3% gain. Thinking Long-Term In A Short-Term World If you're like most investors, the past couple months haven't been easy, to say the least. For many, the 2008-09 financial crisis and accompanying market plunge remain fresh in the mind, so when volatility -- mostly to the downside -- began to spike in late July and early August, it evoked some very powerful, frightening flashbacks. Many sold first and asked questions later. These kind of swings can fray the nerves -- and going through them today is probably more difficult than it was a decade or two or three ago. The speed at which information flows in today's society is exponentially greater than it was before the Internet was born. The Internet, the advent of 24-hour cable financial news channels, the soaring popularity of social media sites like Facebook and Twitter, the rise of smartphones and tablet computers -- all of these things have made it possible to watch every single market gyration, and the resulting impact on your portfolio, in real-time. All of this also makes the market seem more volatile -- and dangerous -- than ever. But is it? In trying to answer that question, I looked back through more than two decades worth of the Chicago Board of Options Exchange volatility index (VIX) data. I looked specifically at the 25-day moving average of the VIX (which is based off S&P 500 data) over that period. I found, as you'd expect, that the period involving the 2008-09 financial crisis was the most volatile. In fact, the first 135 days with the highest 25-day moving average for the VIX came during that period, with a high of 65.45. The first non-'08/'09 period to appear was not the past couple months, however. It was late October and early November of 1998, when the lingering effects of the "Asian Contagion", a Russian financial crisis, and the demise of Long-Term Capital Management had the world buzzing with fear of a financial disaster. The highest 25-day moving average for the VIX during that period: 39.5. The third period to appear atop the list: the fall of 2002, when the bear market caused by the Internet-bubble-burst was bottoming, Congress was authorizing President Bush to use the military as he deemed fit in Iraq, terrorists struck in Bali, and the Beltway sniper was on a rampage. During that period, the 25-day moving average for the VIX topped out right around 38. Finally, a handful of days from the past two months begin to appear on the list only after 184 other days from those first three time periods. The highest recent reading came on Oct. 6, when the 25-day VIX moving average was about 37.1. As you can see, the August-September volatility was high, but well within the range of past volatile periods (with the exception of the '08-'09 crisis). But it probably felt worse, given that the 2008-09 plunge was still fresh in investors' minds, and given that today, you have a front-row seat to every twist and turn -- all you need to do is pull your phone out of your pocket and press a couple buttons, and all the data and charts are there for you to see. So, how should investors deal with volatility during this new age of instantaneous information? Well, I think it's very important to focus on the facts, and not the emotions that are swirling in your gut, as hard as that may seem. And right now, I believe that -- despite what many pundits are saying -- the economy is hanging in there, and the market is offering some very good value. The facts show that, despite all the fear, both the manufacturing and service sectors expanded (albeit slightly) in each month of the third quarter. They show that new unemployment claims actually fell by about 6% from the end of the second quarter to the end of the third quarter. And they show that consumers did not, as many expected, stop spending. To be sure, there are a number of major problems facing the economy, both at home and in Europe. But so far, we're weathering the storm. And, as I touched on last newsletter, the facts about the market's valuation are quite positive. Based on trailing and projected one-year earnings, sales, gross domestic product levels, and dividend yields, the market looks fairly valued or undervalued. The 10-year price/earnings ratio remains elevated, but it's still far from "exuberant" levels seen near past market tops. Also keep this in mind: Periods of volatility tend to be followed by strong returns. Back in that turbulent 1998 period I mentioned, the daily VIX fell below 35 on Oct. 15. Over the next year, the S&P 500 returned 19.1%. In that 2002 period we examined, the VIX fell below 35 on Oct. 17. Over the next year, the S&P gained 18.2%. As for the '08-'09 financial crisis period, the VIX fell below 35 on May 4, 2009. Over the next year, the S&P surged 29.4%. And today? Well, the VIX hit a recent high of 45.45 on Oct. 3, but since then has tumbled. It crossed the 35 threshold on Oct. 10, and, as of mid-day on Oct. 13, it was down below 32. That doesn't mean the volatility is over, or that the market will shoot upward in a smooth, easy path from here. But it does mean that over the long haul, investors who have the stomach to stick with proven strategies through volatile periods usually end up better off for it. That's the hardest part of investing -- staying disciplined while facing dramatic short-term market swings. But that's how just about all the gurus I follow built their exceptional track records, and it's a big part of why the Hot List has been so successful over the long term.		Editor-in-Chief: John Reese Since Inception   Hot List 119.2% S&P 500 20.3% Accuracy 55.9% Beta 1.2 YTD   Hot List -18.8% S&P 500 -4.3% Since Last Issue   Hot List 4.5% S&P 500 3.7% Avg. Fundamentals   Market Cap (mil) $17,275 PE Ratio 8.5 5 Yr EPS Growth 22.0% Yield 3.1% Rel. Strength 44 Portfolio Sectors Services 5 Healthcare 2 Technology 1 Basic Materials 1 Energy 1
Advertisement Validea Capital Management - Private Portfolio Management Based on Strategies of Legends Are you looking for an alternative to your underperforming mutual funds or financial advisor? Click here to download Validea Capital's investment kit and learn more about the firm's guru-based portfolios. Get More Information on Validea Capital! ** Validea Capital Management is a separate investment advisory firm managed by Validea.com founder John Reese. Thre information above in not intended as personal investment advice and should not be interpreted as such. Guru Spotlight: Benjamin Graham Today, many investors look to Warren Buffett for advice about the stock market and the economy. But before he became one of the world's richest men and greatest investors, there was someone whose investment advice Buffett himself cherished: Benjamin Graham. And Buffett was far from alone. Known as "The Father of Value Investing", Graham inspired a number of famous "sons" -- Mario Gabelli, John Neff, John Templeton, and, most famously, Buffett, are all Graham disciples who went on to their own stock market greatness. So, just who was Graham? Born in England in 1894 as Benjamin Grossbaum (his family later changed its surname to Graham during World War I, when German names were viewed with suspicion), Graham built his reputation -- and fortune -- by using an extremely conservative, low-risk approach to investing. To him, preserving one's original capital was every bit as important as netting big gains, and two factors from his early years may show why. The first was Graham's own family's fall from financial comfort to poverty not long after his father died when he was nine. The second involved his first major business venture, an investment firm he founded with Jerome Newman. Just three years after opening, the stock market crash of 1929 and the Great Depression arrived. Graham's clients, like just about everyone else, were hit hard, according to Graham biographer Janet Lowe, and Graham worked without compensation for five years until his clients' fortunes were fully restored. Having lived through both his own family's financial troubles and the market crash, it's no surprise that the strategy Graham laid out in his classic book The Intelligent Investor was a conservative, loss-averse approach. To Graham, an investment wasn't something that could be turned into quick, easy profits; anything that offers such "easy" rewards also comes with substantial risk, and Graham abhorred risk. True "investment", he wrote, deals with the future "more as a hazard to be guarded against than as a source of profit through prophecy." In terms of specifics, Graham's "Defensive Investor" approach limited risk in a number of ways, and my Graham-based model lays out several of those methods. For example, one key criterion is that a firm's current ratio -- that is, the ratio of its current assets to its current liabilities -- is at least two, showing that the firm is in good financial shape. The approach also targets financially sound firms by requiring that long-term debt not exceed net current assets. Two other criteria the Graham method uses to find low-risk plays: the price/earnings ratio and the price/book ratio. Graham wanted P/E ratios to be no greater than 15 (and, as another signal of his conservative style, he looked not only at trailing 12-month earnings but also at three-year average earnings, to ensure that one-year anomalies didn't skew the P/E ratio). For the price/book ratio, he used a more unusual standard: He believed that the P/E ratio multiplied by the P/B ratio should be no greater than 22. My Graham-inspired strategy tends to find bargains across a variety of areas of the market. Here are the current holdings of the 10-stock Graham portfolio: Forest Laboratories, Inc. (FRX) LHC Group, Inc. (LHCG) L.B. Foster Company (FSTR) UniFirst Corporation (UNF) National Oilwell-Varco (NOV) Curtiss-Wright Corp. (CW) Regal-Beloit Corporation (RBC) NTT DoCoMo, Inc. (DCM) Reliance Steel & Aluminum (RS) United Stationers Inc. (USTR) Two types of stocks that you won't find in the Graham portfolio are technology and financial firms. Graham excluded tech stocks from his holdings because they were too risky, and, while they're not as risky today, I do the same. Financial stocks, meanwhile, aren't explicitly excluded from my Graham model. But because of the low-debt requirements in this strategy, it's nearly impossible for a financial firm to garner approval. Since I started tracking my Guru Strategies more than eight years ago, the performance of my Graham-based model has been rather remarkable. Even though the strategy Graham outlined is now more than 60 years old, it just keeps on working. Through Oct. 12, the 10-stock Graham-based portfolio was up 203.7% since its July 2003 inception, making it my second-best performer. That's a 14.4% annualized return in a period in which the S&P 500 has gained just 2.3% per year. The model's strict balance sheet criteria helped it avoid big losers in 2008, as the portfolio lost less than half of what the broader market lost, and it rebounded big in 2009 and 2010, gaining 31.4% in '09 and 22.6% in '10. This year it's had some big swings amid the volatile market, but through Oct. 12 it was minimizing losses, down 2.5% for the year vs. -4.0% for the S&P. Those figures are a great demonstration of how successful stock investing doesn't need to be incredibly complex or cutting-edge. You don't need fancy theories or gimmicks; you just need to focus on good companies whose stocks are selling at good values. Do that, and you should produce some strong results of your own. News about Validea Hot List Stocks Forest Laboratories Inc. (FRX): Forest said last week that its experimental bipolar disorder drug, cariprazine, met its goal in a late-stage clinical study, the Associated Press reported. The study was designed to evaluate cariprazine as a treatment for acute mania associated with bipolar I disorder, according to AP. The company said patients who took the drug did significantly better than patients who took a placebo. Petroleo Brasileiro SA (PBR): A late September fire has closed Petrobras' 100,000-barrel-per-day Pasadena, Texas, refinery, which is now expected to remain closed through the end of October, Reuters reported. A delayed coking unit has remained open at the refinery, however. No one was injured in the fire. 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 TX TERNIUM S.A. (ADR) Iron & Steel 100 BPI BRIDGEPOINT EDUCATION, INC. Schools 88 FRX FOREST LABORATORIES, INC. Biotechnology & Drugs 85 CPLA CAPELLA EDUCATION COMPANY Schools 77 PBR PETROLEO BRASILEIRO SA (ADR) Oil & Gas - Integrated 68 ASIA ASIAINFO-LINKAGE, INC. Software & Programming 65 CECO CAREER EDUCATION CORP. Schools 64 JOSB JOS. A. BANK CLOTHIERS, INC. Retail (Apparel) 61 HITK HI-TECH PHARMACAL CO. Biotechnology & Drugs 59 DV DEVRY INC. Schools 48 Ticker Market Cap Date Added Start Price Return TX $4,282 9/2/2011 $24.48 $21.36 -12.7% BPI $1,068 3/18/2011 $18.02 $20.33 12.8% FRX $8,860 9/2/2011 $33.10 $32.27 -2.5% CPLA $439 9/2/2011 $30.42 $28.84 -5.2% PBR $151,524 9/30/2011 $22.45 $24.29 8.2% ASIA $701 9/2/2011 $11.00 $9.75 -11.4% CECO $1,176 9/2/2011 $15.36 $15.42 0.4% JOSB $1,364 9/30/2011 $46.63 $49.00 5.1% HITK $433 9/30/2011 $33.60 $33.92 1.0% DV $2,907 9/2/2011 $40.74 $42.75 4.9%

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 TX   |   BPI   |   FRX   |   CPLA   |   PBR   |   ASIA   |   CECO   |   JOSB   |   HITK   |   DV   |   TERNIUM S.A. (ADR) Profile Strategy: Book/Market Investor Based on: Joseph Piotroski Ternium SA is a steel company in Latin America that manufactures and processes flat and long steel products for the construction, home appliances, capital goods, container, food, energy and automotive industries. The Company operates in three segments: Flat Steel Products, comprising the manufacturing and marketing of hot rolled coils and sheets, cold rolled coils and sheets, tin plate, welded pipes, hot dipped galvanized and electro-galvanized sheets and pre-painted sheets; Long Steel Products, comprising the manufacturing and marketing of billets (steel in its basic, semi-finished state), wire rod and bars; Others, comprising mainly pig iron, pellets and pre-engineered metal buildings. During the year ended December 31, 2010, Flat Steel Products accounted to 86% of the Company's overall revenues. Approximately 57% of Ternium's sales were generated in North America and 41% in South and Central America. Analysis Guru Score: 90% BOOK/MARKET RATIO: [PASS] The first criteria of this strategy requires that a company be in the top 20% of the market based on the Book/Market ratio (which is the inverse of the Price/Book ratio). TX, which has a book to market ratio of 1.45, meets this criterion and thus this strategy will use the following rules to determine if it is a financially distressed firm or is unfairly trading at a discount to its book value. The study conducted by Piotroski found that excess returns can be earned by holding a portfolio of high Book/Market stocks. He also found, however, that it is very important to separate companies that trade at a discount because they are financially distressed from companies that are unfairly trading at a discount. The following criteria are used to help provide this distinction. RETURN ON ASSETS: [PASS] As a first step to determining whether a firm is not financially distressed, this methodology requires that the return on assets for the most recent fiscal year be positive. TX's return on assets was 5.59% in the most recent year, therefore it passes this test. CHANGE IN RETURN ON ASSETS: [PASS] The next requirement is that the return on assets for the most recent fiscal year must be greater than the return on assets for the previous fiscal year. TX's return on assets was 5.59% in the most recent year and 2.80% in the previous year, therefore it passes this test. CASH FLOW FROM OPERATIONS: [PASS] In addition to the return on assets, the cash flow from operations for the most recent fiscal year must also be positive. This eliminates companies that are burning cash and therefore are more likely to be financially distressed. TX's cash flow from operations was $806.82 million in the most recent year, therefore it passes this test. CASH COMPARED TO NET INCOME: [PASS] This methodology requires that cash from operations for the most current fiscal year must be greater than net income for the most current fiscal year. TX's cash from operations was $806.82 million in the most recent year, while its net income was $621.47 million, therefore it passes this test. CHANGE IN LONG TERM DEBT/ASSETS: [PASS] The long term debt to assets ratio for the most recent fiscal year must be less than or equal to the previous fiscal year. TX's LTD/Assets was 0.13 in the most recent year and 0.17 in the previous year, therefore it passes this test. CHANGE IN CURRENT RATIO: [FAIL] As an additional test of firm solvency, the current ratio for the most recent fiscal year must be greater than the current ratio for the previous fiscal year. TX's current ratio was 3.56 in the most recent year and 4.34 in the previous year, therefore it fails this test. CHANGE IN SHARES OUTSTANDING: [PASS] The issuance of new stock is considered by this methodology to be a sign that a company is not able to generate enough internal cash to fund its business. Therefore, shares outstanding for the most recent fiscal year must be less than or equal to shares outstanding for the previous fiscal year. TX's shares outstanding was 2,004.7 million in the most recent year and 2,004.7 million in the previous year, therefore it passes this test. CHANGE IN GROSS MARGIN: [PASS] As a sign that a company is expanding its profitability, this strategy requires that gross margin for the most recent fiscal year be greater than gross margin for the previous fiscal year. TX's gross margin was 23.00% in the most recent year and 17.00% in the previous year, therefore it passes this test. CHANGE IN ASSET TURNOVER: [PASS] The final criterion of this strategy requires that asset turnover for the most recent fiscal year be greater than asset turnover for the previous fiscal year. TX's asset turnover was 0.66 in the most recent year and 0.48 in the previous year, therefore it passes this test.   BRIDGEPOINT EDUCATION, INC. Profile Strategy: Growth Investor Based on: Martin Zweig Bridgepoint Education, Inc. (Bridgepoint) is a provider of postsecondary education services. The Company's wholly owned subsidiaries, Ashford University and the University of the Rockies, are regionally accredited academic institutions that offer associate's, bachelor's, master's and doctoral programs in the disciplines of business, education, psychology, social sciences and health sciences. These institutions deliver programs online, as well as at its traditional campuses located in Clinton, Iowa, and Colorado Springs, Colorado. As of December 31, 2010, it offered approximately 1,345 courses, 71 degree programs and 134 specializations. As of December 31, 2010, it had 77,892 students enrolled in its institutions, 99% of whom were attending classes online. Analysis Guru Score: 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. BPI's P/E is 7.05, based on trailing 12 month earnings, while the current market PE is 15.00. 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. BPI's revenue growth is 112.33%, while it's earnings growth rate is 33.34%, based on the average of the 3 and 4 year historical eps growth rates using the current fiscal year eps estimate. Therefore, BPI 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 (38%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (47%) of the current year. Sales growth for the prior must be greater than the latter. For BPI 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. BPI's EPS ($0.90) pass this test. QUARTERLY EARNINGS ONE YEAR AGO: [PASS] The EPS for the quarter one year ago must be positive. BPI's EPS for this quarter last year ($0.58) 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. BPI's growth rate of 55.17% 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 BPI is 16.67%. This should be less than the growth rates for the 3 previous quarters, which are 64.86%, 36.36%, and 87.76%. BPI 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, 66.39%, (versus the same three quarters a year earlier) is greater than the growth rate of the current quarter earnings, 55.17%, (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 BPI is 55.2%, 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, 55.17% must be greater than or equal to the historical growth which is 33.34%. BPI 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. BPI, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were -2.15, 0.32, 3.15, 0.74, and 2.14, 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. BPI's long-term growth rate of 33.34%, based on the average of the 3 and 4 year historical eps growth rates using the current fiscal year eps estimate, 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. BPI's Debt/Equity (0.00%) is not considered high relative to its industry (58.18%) 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 BPI, this criterion has not been met (insider sell transactions are 108, while insiders buying number 94). 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.   FOREST LABORATORIES, INC. Profile Strategy: Value Investor Based on: Benjamin Graham Forest Laboratories, Inc. (Forest) develops, manufactures and sells branded forms of ethical drug products, most of which requires a physician's prescription. The Company also focuses on the development and introduction of new products, including products developed in collaboration with licensing partners. Its products include those developed by the Company and those acquired from other pharmaceutical companies and integrated into its marketing and distribution systems. The Company's principal products include Lexapro, Namenda, Bystolic, Savella and Teflaro. On April 13, 2011, the Company acquired Clinical Data Inc. (Clinical Data), a specialty pharmaceutical company. Analysis Guru Score: 100% SECTOR: [PASS] FRX 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. FRX's sales of $4,504.7 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. FRX's current ratio of 3.53 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 FRX is $0.0 million, while the net current assets are $2,746.8 million. FRX passes this test. LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. FRX's EPS growth over that period of 164.9% passes the EPS growth test. P/E RATIO: [PASS] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. FRX's P/E of 11.60 (using the 3 year PE) passes this test. PRICE/BOOK RATIO: [PASS] The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. FRX's Price/Book ratio is 1.68, while the P/E is 11.60. FRX passes the Price/Book test.   CAPELLA EDUCATION COMPANY Profile Strategy: Growth/Value Investor Based on: James P. O'Shaughnessy Capella Education Company is an online postsecondary education services company. Through its wholly owned subsidiary, Capella University, the Company offers a range of doctoral, master's and bachelor's programs. As December 31, 2010, it offered over 1,250 online courses and 43 academic programs with 136 specializations to over 39,000 learners. It also offers certificate programs, which consist of a series of courses focused on a particular area of study. In addition, Capella Education Company also offers academic services, such as new learner orientation, technical support, academic advising, research services (particularly for doctoral degree candidates), writing services and online tutoring. It also provides appropriate educational accommodations to learners with documented disabilities through its disability support services team. During the year ended December 31, 2010, it formed the joint-venture Sophia Learning, LLC, as majority owner. Analysis Guru Score: 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. CPLA, with a market cap of $439 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. CPLA, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 1.06, 1.33, 1.66, 2.51 and 3.64, 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. CPLA's Price/Sales ratio of 1.00, 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. CPLA has a relative strength of 10. 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.   PETROLEO BRASILEIRO SA (ADR) Profile Strategy: P/E/Growth Investor Based on: Peter Lynch Petroleo Brasileiro SA Petrobras (Petrobras) is a Brazilian integrated oil and gas company. It operates in five segments: exploration and production; refining, commercialization and transport of oil and natural gas; petrochemicals; distribution of derivatives, electrical energy, biofuels and other renewable energy sources. Directly or through its subsidiaries, Petrobras is engaged in the research, extraction, refining, processing, commercialization and transport of oil from wells, shales and other rocks, its derivatives, natural gas and other liquid hydrocarbons, as well as in activities related to energy, promoting research, development, production, transport, distribution and commercialization of all forms of energy. As of December 31, 2010, it had 132 production platforms, 16 refineries, 291 vessels, 29,398 kilometers of pipelines, six biofuel plants, 16 thermoelectric plants, one pilot wind farm, 8,477 service stations and two fertilizer plants, as well as presence in 30 countries. Analysis Guru Score: 93% DETERMINE THE CLASSIFICATION: According to this methodology, PBR is a "Slow Grower", based on its single digit earnings growth of 9.02%, based on the average of the 3, 4 and 5 year historical eps growth rates. SALES: [PASS] PBR would fall into the "Dividend Payers" category according to this methodology. The first requirement of a Slow Grower is that its sales exceed one billion. PBR's sales are $133,691 million. It passes the test. 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 PBR was 12.10% last year, while for this year it is 9.86%. Since inventory to sales has decreased from last year by -2.24%, PBR passes this test. YIELD COMPARED TO THE S&P 500: [PASS] This methodology also maintains that the Yield of a "Slow Grower" should be high, which includes being higher than the S&P average (currently 2.52%), and at least 3%. This yield is required because dividends are the main reason for investing in "Slow Growers". The yield for PBR is 5.10% so it passes this test. YIELD ADJUSTED P/E/GROWTH (PEG) RATIO: [PASS] This methodology would consider the Yield-adjusted P/E/G ratio for PBR of 0.43, based on the average of the 3, 4 and 5 year historical eps growth rates, to be excellent. TOTAL DEBT/EQUITY RATIO: [PASS] This methodology would consider the Debt/Equity ratio for PBR (39.72%) to be normal (equity is approximately twice debt). FREE CASH FLOW: [NEUTRAL] The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it is above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for PBR (-18.24%) 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 PBR (-23.61%) 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.   ASIAINFO-LINKAGE, INC. Profile Strategy: Value Investor Based on: Benjamin Graham AsiaInfo-Linkage, Inc. (AsiaInfo-Linkage), formerly AsiaInfo Holdings, Inc., is a provider of telecommunications software solutions and information technology products and services in China. The Company's software and services enables its customers to build, maintain, operate, manage and improve their communications infrastructure. It's products and services in telecom business include business operation support systems, including billing and partnership relationship management applications; business intelligence systems, including data warehousing platforms and data mining applications; operating support systems (OSS) package, including protocol adaptor, service fulfilment, process management and service activation; service and data applications, such as mail centers, mobile device management and mobile e-commerce platforms, and network infrastructure services, including network design and implementation, integrated network management and professional maintenance and support. Analysis Guru Score: 71% SECTOR: [FAIL] ASIA is in the Technology sector, which is one sector that this methodology avoids. Technology and financial stocks were considered too risky to invest in when this methodology was published. At that time they were not the driving force of the market as they are today. Although this methodology would avoid ASIA, we will provide the rest of the analysis, as we feel times have changed. SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. ASIA's sales of $455.5 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. ASIA's current ratio of 2.40 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 ASIA is $0.0 million, while the net current assets are $332.1 million. ASIA 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 ASIA 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. ASIA's P/E of 14.80 (using the 3 year PE) passes this test. PRICE/BOOK RATIO: [PASS] The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. ASIA's Price/Book ratio is 0.75, while the P/E is 14.80. ASIA passes the Price/Book test.   CAREER EDUCATION CORP. Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher Career Education Corporation (CEC), through colleges, schools and universities that are part of the CEC family, offers education to a diverse student population of over 116,000 students in a variety of career-oriented disciplines. The Company has more than 90 campuses that serve these students are located throughout the United States and in France, Italy and the United Kingdom and Monaco. Its institutions includes American InterContinental University (AIU), Brooks Institute; Colorado Technical University (CTU), Harrington College of Design, INSEEC Group (INSEEC) Schools, International University of Monaco (IUM), International Academy of Design & Technology (IADT), Istituto Marangoni, Le Cordon Bleu North America (LCB), and Sanford-Brown Institutes and Colleges. CEC organized its businesses across four segments: University, Health Education, Culinary Arts and International. On April 15, 2010, the Company acquired IUM, an international business university. 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 ratios below 0.75 are tremendous values and should be sought. CECO's P/S of 0.56 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. CECO's Debt/Equity of 0.14% 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. CECO 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 CECO At this Point Is CECO a "Super Stock"? NO 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.CECO's P/S ratio of 0.56 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: [FAIL] This methodology looks for companies that have an inflation adjusted EPS growth rate greater than 15%. CECO's inflation adjusted EPS growth rate of 10.19% fails 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. CECO's free cash per share of 1.58 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. CECO, whose three year net profit margin averages 5.17%, passes this evaluation.   JOS. A. BANK CLOTHIERS, INC. Profile Strategy: P/E/Growth Investor Based on: Peter Lynch Jos. A. Bank Clothiers, Inc. (Jos. A. Bank) is a designer, manufacturer, retailer and direct marketer of men's tailored and casual clothing and accessories and is a retailer of tuxedo rental products. It sells substantially all of its products exclusively under the Jos. A. Bank label through its 506 retail stores (as of January 29, 2011, which includes 12 outlet and factory stores and 14 franchise stores) located throughout 42 states and the District of Columbia in the United States, as well as through the Company's nationwide catalog and Internet (www.josbank.com) operations. It sources substantially all of its merchandise from suppliers and manufacturers or through buying agents using Jos. A. Bank designs and specifications. The Company operates in two segments: Stores and Direct Marketing. The Stores segment consists of all Company-owned stores, excluding outlet and factory stores (full-line stores). The Direct Marketing segment consists of its Internet and catalog operations. Analysis Guru Score: 72% DETERMINE THE CLASSIFICATION: JOSB is considered a "Stalwart", according to this methodology, for its earnings growth of 18.71%. This is based on based on the average of the 3, 4 and 5 year historical eps growth rates, which lies within a moderate 10%-19% range. 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. However, JOSB is not considered a "True Stalwart" for its sales of $916 million are less than the multi-billion dollar level. YIELD ADJUSTED P/E TO GROWTH (PEG) RATIO: [PASS] The Yield-adjusted P/E/G ratio for JOSB (0.80), based on the average of the 3, 4 and 5 year historical eps growth rates, is O.K. EARNINGS PER SHARE: [PASS] The EPS for a stalwart company must be positive. JOSB's EPS ($3.29) would satisfy this criterion. TOTAL DEBT/EQUITY RATIO: [PASS] This methodology would consider the Debt/Equity ratio for JOSB (0.00%) to be wonderfully 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 JOSB (5.63%) 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 JOSB (19.74%) 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.   HI-TECH PHARMACAL CO. Profile Strategy: Small-Cap Growth Investor Based on: Motley Fool Hi-Tech Pharmacal Co., Inc. (Hi-Tech) is a specialty manufacturer and marketer of prescription, over-the-counter (OTC) and nutritional products. Hi-Tech develops, manufactures and markets products in three categories: generics, prescription brands and OTC brands. The Company produces a range of products for various disease states, including glaucoma, asthma, bronchial disorders, dermatological disorders, allergies, pain, stomach, oral care and other conditions. Its generic products are primarily prescription items and include oral solutions and suspensions, topical creams and ointments, as well as nasal sprays. It also specializes in the manufacture of products in its sterile facility capable of producing liquid ophthalmic, otic and inhalation products. The generic product category includes a small amount of contract manufacturing sales for both the prescription and OTC markets. On May 9, 2011, the Company divested the Midlothian Laboratories division. Analysis Guru Score: 100% PROFIT MARGIN: [PASS] This methodology seeks companies with a minimum trailing 12 month after tax profit margin of 7%. The companies that pass this criterion have strong positions within their respective industries and offer greater shareholder returns. A true test of the quality of a company is that they can sustain this margin. HITK's profit margin of 23.57% passes this test. RELATIVE STRENGTH: [PASS] The investor must look at the relative strength of the company in question. Companies whose relative strength is 90 or above (that is, the company outperforms 90% or more of the market for the past year), are considered attractive. Companies whose price has been rising much quicker than the market tend to keep rising. HITK, with a relative strength of 93, satisfies this test. COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: [PASS] Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These growth rates give you the dynamic companies that you are looking for. These rates for HITK (59.09% for EPS, and 42.99% for Sales) are good enough to pass. INSIDER HOLDINGS: [PASS] HITK's insiders should own at least 10% (they own 18.17% ) of the company's outstanding shares which is the minimum required. A high percentage typically indicates that the insiders are confident that the company will do well. CASH FLOW FROM OPERATIONS: [PASS] A positive cash flow is typically used for internal expansion, acquisitions, dividend payments, etc. A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. HITK's free cash flow of $2.88 per share passes this test. PROFIT MARGIN CONSISTENCY: [PASS] HITK's profit margin has been consistent or even increasing over the past three years (Current year: 21.72%, Last year: 19.53%, Two years ago: 9.65%), passing the requirement. It is a sign of good management and a healthy and competitive enterprise. R&D AS A PERCENTAGE OF SALES: [PASS] HITK is either maintaining the same levels of R&D expenditures(currently $9.4 million) or increasing these levels which is a good sign. This allows the company to develop the superior technology and new products that will put everyone else out of business. This criterion is particularly important for high-tech and medical stocks because they are so R&D dependant. CASH AND CASH EQUIVALENTS: [PASS] HITK's level of cash $62.3 million passes this criteria. If a company is a cash generator, like HITK, it has the ability to pay off debt (if it has any) or acquire other companies. Most importantly, good operations generate cash. INVENTORY TO SALES: [PASS] This methodology strongly believes that companies, especially small ones, should have tight control over inventory. It's a warning sign if a company's inventory relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Inventory to Sales for HITK was 12.30% last year, while for this year it is 12.46%. Although the inventory to sales is rising, it is below the max 30% that is allowed. The investor can still consider the stock if all other criteria appear very attractive. ACCOUNT RECEIVABLE TO SALES: [PASS] This methodology wants to make sure that a company's accounts receivable do not get significantly out of line with sales. It's a warning sign if a company's accounts receivable relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Accounts Receivable to Sales for HITK was 24.85% last year, while for this year it is 30.20%. Although the AR to sales is rising, it is below the max 30% that is allowed. The investor can still consider the stock if all other criteria appear very attractive. LONG TERM DEBT/EQUITY RATIO: [PASS] HITK's trailing twelve-month Debt/Equity ratio (0.32%) is a little higher than what this methodology is looking for, but is still at an acceptable level. The superior companies that you are looking for don't need to borrow money in order to grow. This company has borrowed very little which is still OK. "THE FOOL RATIO" (P/E TO GROWTH): [PASS] The "Fool Ratio" is an extremely important aspect of this analysis. If the company has attractive fundamentals and its Fool Ratio is 0.5 or less (HITK's is 0.21), the shares are looked upon favorably. These high quality companies can often wind up as the biggest winners. HITK passes this test. The following criteria for HITK are less important which means you would place less emphasis on them when making your investment decision using this strategy: AVERAGE SHARES OUTSTANDING: [PASS] HITK has not been significantly increasing the number of shares outstanding within recent years which is a good sign. HITK currently has 13.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock. SALES: [PASS] Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. HITK's sales of $207.8 million based on trailing 12 month sales, are fine, making this company one such "prospective gem". HITK passes the sales test. DAILY DOLLAR VOLUME: [PASS] HITK passes the Daily Dollar Volume (DDV of $6.3 million) test. It is required that this number be less than $25 million because these are the stocks that remain relatively undiscovered by institutions. "You'll be scoring touchdowns against the big guys on your turf." PRICE: [PASS] This is a very insignificant criterion for this methodology. But basically, low prices are chosen because "small numbers multiply more rapidly than large ones" and the potential for big returns expands. HITK with a price of $33.92 passes the price test, even though it doesn't fall in the preferred range. The price should be above $7 in order to eliminate penny stocks and below $20 since most stocks in this price range are undiscovered by the institutions. INCOME TAX PERCENTAGE: [PASS] HITK's income tax paid expressed as a percentage of pretax income this year was (32.53%) and last year (31.42%) are greater than 20% which is an acceptable level. If the tax rate is below 20% this could mean that the earnings that were reported were unrealistically inflated due to the lower level of income tax paid. This is a concern.   DEVRY INC. Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher DeVry Inc. (DeVry) is a provider of educational services and the parent organization of Advanced Academics, Becker Professional Education, Carrington College and Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University. These institutions offer a range of programs in business, healthcare and technology and serve students in middle school through postsecondary education, as well as accounting and finance professionals. In August 2011, the Company acquired he business operations of privately held American University of the Caribbean. 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. DV's P/S ratio of 1.33 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. DV's Debt/Equity of 0.00% is exceptional, thus passing the test. PRICE/RESEARCH RATIO: [PASS] This methodology considers companies in the Technology and Medical sectors to be attractive if they have low Price/Research ratios. DV 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 DV At this Point Is DV 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, DV, who has a P/S of 1.33, 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%. DV's inflation adjusted EPS growth rate of 42.28% 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. DV's free cash per share of 3.64 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. DV, whose three year net profit margin averages 13.70%, passes 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 ARO AEROPOSTALE, INC. Retail (Apparel) 92 GTAT GT ADVANCED TECHNOLOGIES INC Semiconductors 68 AFSI AMTRUST FINANCIAL SERVICES, INC. Insurance (Prop. & Casualty) 66 OZRK BANK OF THE OZARKS, INC. Regional Banks 65 QSII QUALITY SYSTEMS, INC. Software & Programming 58 MKTX MARKETAXESS HOLDINGS INC. Investment Services 58 CW CURTISS-WRIGHT CORP. Misc. Fabricated Products 55 LULU LULULEMON ATHLETICA INC. Retail (Apparel) 54 CSH CASH AMERICA INTERNATIONAL, INC. Misc. Financial Services 52 WRLD WORLD ACCEPTANCE CORP. Consumer Financial Services 49

Disclaimer

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