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Executive Summary	June 10, 2011

The Economy The economy is continuing push forward, but recent data shows that it's been an uphill climb in the past month or so. That's been evident in the job market. The private sector added 83,000 jobs last month, according to the latest Labor Department report, which -- while showing things are still heading in the right direction -- was the lowest total in almost a year. Weekly data on new claims for unemployment have remained virtually unchanged over the past two weeks. They remain at a level far lower than they were during the recession, but not low enough to meaningfully dent the unemployment rate, which rose slightly to 9.1% in June. The so-called "U-6" measure of unemployment, which also includes discouraged workers who have stopped looking for a job, actually fell slightly, but still remains high by historical standards, at 15.8%. Manufacturing activity, meanwhile, continues to increase, though the rate of expansion slowed in May to the lowest level since September 2009, according to the Institute for Supply Management. I wouldn't be too alarmed though -- it was still the 22nd straight month ISM's manufacturing index indicated expansion in the sector, and the slowing of growth was as much a reflection of the past year-and-a-half's extremely impressive numbers as it was of there being a "soft patch" for manufacturing. In fact, ISM's manufacturing index reached significantly lower levels at points during each of the past two economic expansions. (During the late 1990s economic expansion, the index actually indicated manufacturing activity contracted in several months.) ISM's non-manufacturing (or service sector) index rose in May, and indicated that the service sector expanded for the 18th straight month, a good sign. One area that remains a big concern: housing. The S&P/Case-Shiller index of home prices declined 4.2% in the first quarter (vs. the fourth quarter of 2010), new data showed (though the seasonally-adjusted decline was less than half that, 1.9%). The unadjusted data represented a new post-housing-boom low. Pending home sales for April, meanwhile, fell 11.6% from March, according to the National Association of Realtors. The housing market has struggled to gain traction since the first-time-homebuyer tax credit program expired. It's important that it does stabilize and improve, not only for the sake of homeowners, but also for the sake of the financial firms that still hold significant amounts of mortgage-backed securities. Another critical issue that's coming to a head is the end of the second round of the Federal Reserve's quantitative easing efforts. The Fed's money-printing binge has helped bolster markets and asset prices, and it remains to be seen how much the markets will gyrate when the program ends at the end of this month. It's worth noting, however, that the end of QE2 should come as no surprise -- the Fed has said for weeks that it will end as scheduled at the end of June -- so markets should already be counting in much of the impact. As for the market, since our last newsletter, the S&P 500 returned -2.8%, while the Hot List returned -5.0%. For the year, the portfolio has returned 2.6% vs. 2.5% for the S&P. Since its inception in July 2003, the Hot List is far outpacing the index, having gained 176.8% vs. the S&P's 28.8% gain. Waiting for Peter Lynch This past week, an article in the Financial Times entitled, "The Next Generation of Rising Star Fund Managers" caught my eye. The piece looked at five young money managers who, according to some, are the favorites to become the next John Neff or Peter Lynch or Bruce Berkowitz. "The next generation of star fund managers are rising steadily through the ranks," the article explained. "These are the new group of managers that advisers believe will deliver reliable long-term returns for investors in the sectors they manage." Such articles come along from time to time, because -- like the rest of our society these days -- the investment world has a bit of a star-obsession. The idea of superhero-like stock-pickers captivates the media, not to mention individual investors, who dream of producing star-type returns themselves. Unfortunately for investors, the Lynches and Neffs and Berkowitz's are few and far between. More often than not, mutual fund managers not only fail to produce guru-like track records; they also fail to even beat the broader market indices. In his book What Works on Wall Street, James O'Shaughnessy, one of the investors whose writings form the basis for my Guru Strategies, looked at what percentage of equity funds beat the S&P 500 over a series of 10-year periods, beginning with the 10-year period that ended in 1991 and ending with the 10-year period that ended in 2003. According to O'Shaughnessy, "the best 10 years, ending December 31, 1994, saw only 26 percent of the traditionally managed active mutual funds beating the [S&P] index." That means that, at their collective best, only about a quarter of fund managers beat the broader market. Some data shows that those managers who do perform better share something in common: a lengthy tenure. In its year-end "scorecard" report, Standard & Poor's used to provide data on tenure vs. track record. And in its year-end 2006 report (the last for which such information is available), S&P reported that the average manager tenure for U.S. domestic funds was 5.8 years. Those funds that had been in the top half of performers for three consecutive years, meanwhile, averaged 7.1 years. And those who had been in the top half for five straight years? Their managers had been at the helm for an average of 8.6 years. Another S&P study showed that "longer manager tenure was more strongly linked to higher performance than were low expenses or widely diversified fund holdings", according to the Motley Fool's Amanda Kish. The problem, however, is that even if you find a manager with a good long-term track record, he or she could up and leave at any moment, leaving you stuck with an inexperienced or subpar replacement. A good manager's style can also drift, hurting performance, or he or she can just flat-out make big mistakes (think of Legg Mason's Bill Miller, who beat the market for what is believed to be a record 15 straight years before his portfolio was ravaged by the financial crisis. Once the darling of the fund industry, Miller has suffered so badly since 2006 that his Legg Mason Capital Management Value fund's trailing 10-year returns are now in the 99th-worst percentile in its category, according to Morningstar.) That's one area where we believe our system offers a big advantage. By using quantitative stock-picking strategies developed by some of history's most successful investors, the Hot List isn't at the mercy of a star manager who could check out any day now, or whose hot hand could turn to ice. Instead, the Hot List uses a disciplined, repeatable system that has a proven track record of success, one that we can -- and intend to -- stick with for the long haul. We let the numbers and data drive the Hot List portfolio, not emotions or whims. And in the end, that's what a good fund manager or investor does. The best investors aren't all-knowing soothsayers. They don't have some sort of investing sixth sense or instinct that allows them to know which way the market or individual stocks will move from day to day and week to week. Such people don't exist. Instead, they have the discipline, long-term mindset, and intestinal fortitude needed to stick with a proven strategy through the market's inevitable ups and downs. Don't take my word for it. Think about the words of those few who have actually put up lengthy track records of success. "If you're in the market, you have to know there's going to be declines," Peter Lynch once told PBS Television. "[Bear markets] are gonna happen. When they're gonna start, no one knows. If you're not ready for that, you shouldn't be in the stock market. I mean stomach is the key organ here. It's not the brain. Do you have the stomach for these kind of declines?" And how about Warren Buffett, perhaps the greatest investor of all-time. "To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information," he wrote in the preface to a revised edition of Benjamin Graham's The Intelligent Investor. "What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding the framework. You must supply the emotional discipline." So, who will the next truly great fund managers be -- not the ones who string together a couple big years, but the ones who put up lengthy track records of success? I don't know -- and, of course, no one does. But I'd bet that, whoever they are, they will have the same disciplined, analytical temperament that has allowed Buffett, Lynch, and the other gurus I follow to be so successful over the years. That's the type of approach we try to use in handling the Hot List, and we plan on sticking with that approach for the long haul.		Editor-in-Chief: John Reese Since Inception   Hot List 176.8% S&P 500 28.8% Accuracy 56.5% Beta 1.2 YTD   Hot List 2.6% S&P 500 2.5% Since Last Issue   Hot List -5.0% S&P 500 -2.8% Avg. Fundamentals   Market Cap (mil) $31,647 PE Ratio 13.5 5 Yr EPS Growth 28.4% Yield 5.2% Rel. Strength 64 Portfolio Sectors Services 4 Technology 4 Consumer Cyclical 1 Healthcare 1
Advertisement Validea Capital Management - Private Portfolio Management Based on Strategies of Legends Are you looking for an alternative to your underperforming mutual funds or financial advisor? Click here to download Validea Capital's investment kit and learn more about the firm's guru-based portfolios. Get More Information on Validea Capital! ** Validea Capital Management is a separate investment advisory firm managed by Validea.com founder John Reese. Thre information above in not intended as personal investment advice and should not be interpreted as such. The Fallen As we rebalance the Validea Hot List, 3 stocks leave our portfolio. These include: Aeropostale, Inc. (ARO), Tech Data Corporation (TECD) and Humana Inc. (HUM). The Keepers 7 stocks remain in the portfolio. They are: Amtech Systems, Inc. (ASYS), Research In Motion Limited (Usa) (RIMM), Skechers Usa, Inc. (SKX), Sanofi-aventis Sa (Adr) (SNY), At&t Inc. (T), Gamestop Corp. (GME) and Bridgepoint Education, Inc. (BPI). The Newbies We are adding 3 stocks to the portfolio. These include: Dollar Tree, Inc. (DLTR), Gt Solar International, Inc. (SOLR) and Ancestry.com Inc (ACOM). Portfolio Changes Additions   DOLLAR TREE, INC. DLTR GT SOLAR INTERNATIONAL, INC. SOLR ANCESTRY.COM INC ACOM Deletions   AEROPOSTALE, INC. ARO TECH DATA CORPORATION TECD HUMANA INC. HUM Newcomers to the Validea Hot List Dollar Tree, Inc. (DLTR): Based in Virginia, Dollar Tree's stores offer a wide variety of discount merchandise, ranging from food items to household goods to toys to lawn- and garden-related items. It has a market cap of about $7.6 billion, and has taken in more than $6 billion in sales in the past year. Dollar Tree, which gained 17.4% while in the Hot List from Sept. 3, 2010 to March 18 of this year, gets approval from my Peter Lynch- and James O'Shaughnessy-based models. To read more about it, check out the "Detailed Stock Analysis" section below. GT Solar International (SOLR): Based in Merrimack, New Hampshire, GT has been in the solar power business for 17 years now, and is a leader in polysilicon production technology, and sapphire and silicon crystalline growth systems. Its products might not ring a bell, but they are key technologies involved in solar cell and panel and LED production. The firm has taken in almost $900 million in sales in the past year. GT Solar gets very high marks from my Joel Greenblatt-inspired model. See the "Detailed Stock Analysis" section below to learn more about the stock. Ancestry.com Inc. (ACOM): This firm started as a publishing company nearly three decades ago, and has become the world's largest online resource for people researching family history. As of March, it had more than 1.6 million paying subscribers. It has more than 6 billion historical records in its database. The firm has a $1.7 billion market cap, and has taken in about $327 million in sales in the past year. Thanks in large part to its explosive growth in recent years, Ancestry.com gets solid scores from a couple of my growth-focused models, including my Martin Zweig-inspired approach and the strategy I base on the writings of The Motley Fool's Tom and David Gardner. Scroll down to the "Detailed Stock Analysis" section to learn more about the stock. News about Validea Hot List Stocks Sanofi-Aventis SA (SNY): Sanofi and Regeneron Pharmaceuticals said this week that a study showed that the drug Zaltrap showed significantly better survival rates than a placebo did in testing for patients who'd been previously treated for metastatic colorectal cancer. The drug was combined with another regimen called Folfiri and given to patients who'd been treated with oxaliplatin in the multi-national study, according to MarketWatch. Skechers USA Inc. (SKX): As of Thursday afternoon, Skechers shares had tumbled 23% since our last newsletter. The catalyst for the drop seemed to be analysts at one firm lowering their price target on the stock. The stock still gets strong interest from my Peter Lynch- and Benjamin Graham-based models, however, and the Hot List is holding onto it, expecting it to rebound. 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 ASYS AMTECH SYSTEMS, INC. Semiconductors 92 BPI BRIDGEPOINT EDUCATION, INC. Schools 83 ACOM ANCESTRY.COM INC Computer Services 74 DLTR DOLLAR TREE, INC. Retail (Department & Discount) 65 T AT&T INC. Communications Services 63 SOLR GT SOLAR INTERNATIONAL, INC. Semiconductors 58 RIMM RESEARCH IN MOTION LIMITED (USA) Communications Equipment 58 SNY SANOFI-AVENTIS SA (ADR) Biotechnology & Drugs 58 GME GAMESTOP CORP. Retail (Technology) 57 SKX SKECHERS USA, INC. Footwear 56 Ticker Market Cap Date Added Start Price Return ASYS $183 5/13/2011 $23.34 $19.15 -18.0% BPI $1,322 3/18/2011 $18.02 $25.01 38.8% ACOM $1,707 6/10/2011 TBD $36.95 TBD DLTR $7,630 6/10/2011 TBD $62.40 TBD T $179,614 5/13/2011 $31.41 $30.33 -3.4% SOLR $1,532 6/10/2011 TBD $12.17 TBD RIMM $19,610 5/13/2011 $43.24 $37.61 -13.0% SNY $100,451 3/18/2011 $33.37 $38.00 13.9% GME $3,748 9/3/2010 $19.01 $26.50 39.4% SKX $677 3/18/2011 $18.46 $13.59 -26.4%

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 ASYS   |   BPI   |   ACOM   |   DLTR   |   T   |   SOLR   |   RIMM   |   SNY   |   GME   |   SKX   |   AMTECH SYSTEMS, INC. Profile Strategy: Small-Cap Growth Investor Based on: Motley Fool Amtech Systems, Inc. (Amtech), incorporated in October 1981, through its wholly owned subsidiaries, supplies horizontal diffusion furnace systems used for solar (photovoltaic) cell and semiconductor manufacturing. The Company provides products and services to two industries: the solar industry and the semiconductor industry. The Company's solar and semiconductor equipment is sold under brand names of Tempress Systems and Bruce Technologies, which have customers in both the solar industry and the semiconductor industry. Within the solar industry, its provide diffusion and automation equipment to solar cell manufacturers and it also offers plasma enhanced chemical vapor deposition (PECVD) and phosphocilicate glass (PSG) equipment. Within the semiconductor industry, it provides equipment to manufacturers of analog, power, automotive and microcontroller chips with geometries greater than 0.3 micron. Analysis Guru Score: 87% 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. ASYS's profit margin of 10.70% 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. ASYS, with a relative strength of 94, 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 ASYS (3,750.00% for EPS, and 280.91% for Sales) are good enough to pass. INSIDER HOLDINGS: [FAIL] ASYS's insiders should own at least 10% (they own 0.53%) of the company's outstanding shares. This does not satisfy the minimum requirement, and companies that do not pass this criteria are less attractive. 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. ASYS's free cash flow of $1.39 per share passes this test. PROFIT MARGIN CONSISTENCY: [FAIL] The profit margin in the past must be consistently increasing. The profit margin of ASYS has been inconsistent in the past three years (Current year: 7.97%, Last year: -3.00%, Two years ago: 3.56%), which is unacceptable. This inconsistency will carryover directly to the company's bottom line, or earnings per share. R&D AS A PERCENTAGE OF SALES: [PASS] ASYS is either maintaining the same levels of R&D expenditures(currently $2.1 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] ASYS's level of cash $56.8 million passes this criteria. If a company is a cash generator, like ASYS, 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 ASYS was 25.41% last year, while for this year it is 20.26%. Since the inventory to sales is decreasing by -5.15% the stock passes this criterion. 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 ASYS was 25.60% last year, while for this year it is 20.40%. Since the AR to sales is decreasing by -5.20% the stock passes this criterion. LONG TERM DEBT/EQUITY RATIO: [PASS] ASYS's trailing twelve-month Debt/Equity ratio (0.00%) is at a great level according to this methodology because the superior companies that you are looking for don't need to borrow money in order to grow. "THE FOOL RATIO" (P/E TO GROWTH): [PASS] The "Fool Ratio" is an extremely important aspect of this analysis. If the company has attractive fundamentals and its Fool Ratio is 0.5 or less (ASYS's is 0.27), the shares are looked upon favorably. These high quality companies can often wind up as the biggest winners. ASYS passes this test. The following criteria for ASYS are less important which means you would place less emphasis on them when making your investment decision using this strategy: AVERAGE SHARES OUTSTANDING: [PASS] ASYS has not been significantly increasing the number of shares outstanding within recent years which is a good sign. ASYS currently has 10.0 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. ASYS's sales of $203.5 million based on trailing 12 month sales, are fine, making this company one such "prospective gem". ASYS passes the sales test. DAILY DOLLAR VOLUME: [PASS] ASYS passes the Daily Dollar Volume (DDV of $5.3 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. ASYS with a price of $19.15 passes the price test. 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] ASYS's income tax paid expressed as a percentage of pretax income this year was (39.15%) and last year (20.90%) 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.   BRIDGEPOINT EDUCATION, INC. Profile Strategy: Growth Investor Based on: Martin Zweig Bridgepoint Education, Inc. (Bridgepoint) is a accredited provider of postsecondary education services. The Company offers associate's, bachelor's, master's and doctoral programs in the disciplines of business, education, psychology, social sciences and health sciences. It delivers its programs online, as well as at its traditional campuses located in Clinton, Iowa, and Colorado Springs, Colorado. As of December 31, 2009, it offered approximately 1,150 courses, 60 degree programs and 125 specializations and concentrations. As of December 31, 2009, it had 53,688 students enrolled in its institutions, 99% of whom were attending classes online. 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. BPI's P/E is 9.76, based on trailing 12 month earnings, while the current market PE is 17.00. 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 31.31%, 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: [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 (47%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (46%) of the current year. Sales growth for the prior must be greater than the latter. For BPI 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. BPI's EPS ($0.92) 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 ($0.49) 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. BPI's growth rate of 87.76% 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 15.65%. This should be less than the growth rates for the 3 previous quarters, which are 2,800.00%, 64.86%, and 36.36%. 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, 127.78%, (versus the same three quarters a year earlier) is greater than the growth rate of the current quarter earnings, 87.76%, (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 87.8%, 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, 87.76% must be greater than or equal to the historical growth which is 31.31%. 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 31.31%, 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 (40.37%) 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 68, while insiders buying number 62). 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.   ANCESTRY.COM INC Profile Strategy: Growth Investor Based on: Martin Zweig Ancestry.com Inc. is an online resource for family history. It has developed systems for digitizing handwritten historical documents, and has established relationships with national, state and local government archives, historical societies, religious institutions and private collectors of historical content around the world. These digital records and documents, combined with the online search technologies and tools, enable the subscribers to research their family history, build their family trees and make meaningful discoveries about the lives of their ancestors. As of February 10, 2010, the registered users have created over 14 million family trees containing nearly 1.5 billion profiles. They have uploaded and attached to their trees a combination of nearly 32 million photographs, scanned documents and written stories. In addition, the Company continues to deploy tools and technologies to facilitate social networking and crowd sourcing, a means of leveraging collaborative efforts. Analysis Guru Score: 77% P/E RATIO: [FAIL] The P/E of a company must be greater than 5 to eliminate weak companies, not more than 3 times the current Market P/E because the situation is much too risky, and never greater than 43. ACOM's P/E is 43.68, based on trailing 12 month earnings, while the current market P/E is 17.00. Therefore, it fails 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. ACOM's revenue growth is 19.00%, while it's earnings growth rate is 43.73%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, ACOM 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 (41.3%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (37.6%) of the current year. Sales growth for the prior must be greater than the latter. For ACOM 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. ACOM's EPS ($0.18) pass this test. QUARTERLY EARNINGS ONE YEAR AGO: [PASS] The EPS for the quarter one year ago must be positive. ACOM's EPS for this quarter last year ($0.08) 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. ACOM's growth rate of 125.00% 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 ACOM is 21.86%. This should be less than the growth rates for the 3 previous quarters, which are 50.00%, 140.00%, and 25.00%. ACOM 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, 59.52%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 125.00%, (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, 125.00% must be greater than or equal to the historical growth which is 43.73%. ACOM 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. ACOM, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 0.21, 0.17, 0.06, 0.51, and 0.76, 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. ACOM's long-term growth rate of 43.73%, 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. ACOM's Debt/Equity (0.00%) is not considered high relative to its industry (40.00%) 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 ACOM, this criterion has not been met (insider sell transactions are 52, while insiders buying number 37). 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.   DOLLAR TREE, INC. Profile Strategy: Growth/Value Investor Based on: James P. O'Shaughnessy Dollar Tree, Inc. is an operator of discount variety stores offering merchandise at the fixed price of $1. At January 29, 2011, the Company operated 4,101 discount variety retail stores. Its stores operate under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant and Dollar Bills. Approximately 3,935 of these stores sell substantially all items for $1 or less in the United States and $1.25 or less in Canada. Substantially all of the remaining stores, operating as Deal$, sell items for $1 or less but also sell items for more than $1. The Company's optimal store is between 8,000 and 10,000 selling square feet. This store size provides the appropriate amount of space for its merchandise offerings while allowing it to provide service. At January 29, 2011, it operated 4,015 stores in 48 states and the District of Columbia, as well as 86 stores in Canada. In November 2010, it acquired 86 Dollar Giant stores based in Vancouver, British Columbia. 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. DLTR, with a market cap of $7,630 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. DLTR, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were 1.23, 1.39, 1.68, 2.37 and 3.10, 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. DLTR's Price/Sales ratio of 1.26, 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. DLTR, whose relative strength is 82, is in the top 50 and would pass this last criterion.   AT&T INC. Profile Strategy: P/E/Growth Investor Based on: Peter Lynch AT&T Inc. is a holding company. The Company is a provider of telecommunications services in the United States and worldwide. These include wireless communications, local exchange services, long-distance services, data/broadband and Internet services, video services, managed networking, wholesale services and directory advertising and publishing. It operates in four segments: wireless, which provides both wireless voice and data communications services across the United States and, through roaming agreements, in foreign countries; wireline, which provides landline voice and data communication services, AT&T U-Verse TV, broadband and voice services (U-Verse) and managed networking to business customers; advertising solutions, which publishes Yellow and White Pages directories and sells directory advertising and Internet-based advertising and local search, and other, which provides results from customer information services and all corporate and other operations. Analysis Guru Score: 93% DETERMINE THE CLASSIFICATION: T is considered a "True Stalwart", according to this methodology, as its earnings growth of 16.75% lies within a moderate 10%-19% range and its annual sales of $124,997 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. T is attractive if T can hold its own during a recession. YIELD ADJUSTED P/E TO GROWTH (PEG) RATIO: [PASS] The Yield-adjusted P/E/G ratio for T (0.40), based on the average of the 3, 4 and 5 year historical eps growth rates, is excellent. EARNINGS PER SHARE: [PASS] The EPS for a stalwart company must be positive. T's EPS ($3.38) would satisfy this criterion. TOTAL DEBT/EQUITY RATIO: [PASS] This methodology would consider the Debt/Equity ratio for T (57.78%) to be mediocre. If the Debt/Equity ratio is this high, the other ratios and financial statistics for T should be good enough to compensate. 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 T (3.07%) 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 T (-31.44%) 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.   GT SOLAR INTERNATIONAL, INC. Profile Strategy: Small-Cap Growth Investor Based on: Motley Fool GT Solar International, Inc. through its subsidiaries is a global provider of polysilicon production technology, crystalline ingot growth systems and related photovoltaic manufacturing services for the solar industry. Its customers include various solar companies, as well as companies in the chemical industry. The Company's principal products include chemical vapor deposition (CVD) reactors and related equipment used to produce polysilicon, the key raw material used in silicon-based solar wafers and cells, and directional solidification systems (DSS) furnaces and related equipment used to cast multicrystalline ingots by melting and cooling polysilicon in a controlled process. These ingots are used to make photovoltaic (PV) wafers, which are, in turn, used to make solar cells. It operates under two segments: Polysilicon Business and Photovoltaic Business. Analysis Guru Score: 72% 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. SOLR's profit margin of 19.44% 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. SOLR, with a relative strength of 95, 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 SOLR (78.26% for EPS, and 39.53% for Sales) are good enough to pass. INSIDER HOLDINGS: [FAIL] SOLR's insiders should own at least 10% (they own 0.10%) of the company's outstanding shares. This does not satisfy the minimum requirement, and companies that do not pass this criteria are less attractive. 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. SOLR's free cash flow of $1.56 per share passes this test. PROFIT MARGIN CONSISTENCY: [PASS] SOLR's profit margin has been consistent or even increasing over the past three years (Current year: 19.44%, Last year: 16.03%, Two years ago: 16.26%), passing the requirement. It is a sign of good management and a healthy and competitive enterprise. R&D AS A PERCENTAGE OF SALES: [FAIL] SOLR has reduced their R&D expenditures(currently $23.8 million) over the past two years which is unacceptable. SOLR is jeopardizing the future in order to boost current EPS numbers. This criterion is particularly important for high-tech and medical stocks because they are so R&D dependant. CASH AND CASH EQUIVALENTS: [PASS] SOLR's level of cash $362.8 million passes this criteria. If a company is a cash generator, like SOLR, 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 SOLR was 12.65% last year, while for this year it is 14.19%. 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 SOLR was 13.09% last year, while for this year it is 14.35%. 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: [FAIL] SOLR's trailing twelve-month Debt/Equity ratio (50.29%) is too high, according to this methodology. You can find other more superior companies that do not have to borrow money in order to grow. "THE FOOL RATIO" (P/E TO GROWTH): [PASS] The "Fool Ratio" is an extremely important aspect of this analysis. If the company has attractive fundamentals and its Fool Ratio is 0.5 or less (SOLR's is 0.19), the shares are looked upon favorably. These high quality companies can often wind up as the biggest winners. SOLR passes this test. The following criteria for SOLR are less important which means you would place less emphasis on them when making your investment decision using this strategy: AVERAGE SHARES OUTSTANDING: [PASS] SOLR has not been significantly increasing the number of shares outstanding within recent years which is a good sign. SOLR currently has 128.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock. SALES: [FAIL] Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. SOLR's sales of $899.0 million based on trailing 12 month sales, are too high and would therefore fail the test. It is companies with $500 million or less in sales that are most likely to double or triple in size in the next few years. DAILY DOLLAR VOLUME: [FAIL] SOLR does not pass the Daily Dollar Volume (DDV of $45.3 million) test. It exceeds the maximum requirement of $25 million. Stocks that fail the test are too liquid for a small individual investor and many institutions have already discovered it. 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. SOLR with a price of $12.17 passes the price test. 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] SOLR's income tax paid expressed as a percentage of pretax income this year was (35.42%) and last year (37.62%) 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.   RESEARCH IN MOTION LIMITED (USA) Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher Research In Motion Limited (RIM) is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information, including e-mail, phone, short message service (SMS), Internet and intranet-based applications. RIM's portfolio of products, services and embedded technologies are used by organizations worldwide and include the BlackBerry wireless solution, the RIM Wireless Handheld product line, software development tools and other software and hardware. Its subsidiaries include Research In Motion Corporation, Research In Motion UK Limited and RIM Finance, LLC. On June 2, 2010, Harman International sold its software operating systems unit, QNX Software Systems, to the Company. In June 2011, the Company acquired Scoreloop. 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. RIMM's P/S ratio of 0.98 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. RIMM's Debt/Equity of 0.00% is exceptional, thus passing the test. PRICE/RESEARCH RATIO: [PASS] This methodology considers Technology and Medical companies with low Price/Research ratios to be attractive. This ratio indicates how much a market values a company's Research and Development (R&D). Companies with Price/Research ratios between 10 and 15 are on the borderline. A Price/Research ratio above 15 indicates the company spends too little on R&D or is extremely overvalued. Investors should seek those between 5 and 10. RIMM's Price/Research ratio of 14.52 is considered "OK". PRELIMINARY GRADE: Some Interest in RIMM At this Point Is RIMM 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, RIMM, who has a P/S of 0.98, 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%. RIMM's inflation adjusted EPS growth rate of 48.91% 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. RIMM's free cash per share of 4.48 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. RIMM, whose three year net profit margin averages 16.89%, passes this evaluation.   SANOFI-AVENTIS SA (ADR) Profile Strategy: Value Investor Based on: Benjamin Graham Sanofi-Aventis is a pharmaceutical group engaged in the research, development, manufacture and marketing of healthcare products. The Company's business includes two main activities: pharmaceuticals and human vaccines through sanofi pasteur. It is also present in animal health products through Merial Limited (Merial). In its pharmaceutical activity, it specializes in six therapeutic areas: diabetes, oncology, thrombosis and cardiovascular, central nervous system (CNS), and internal medicine. The global portfolio of sanofi-aventis also consists of a range of other pharmaceutical products. It offers vaccines in five areas: pediatric combination vaccines, influenza vaccines, adult and adolescent booster vaccines, meningitis vaccines and travel and endemic vaccines. In October 2010, Siegfried Holding AG sold its PulmoJet Inhalation Project to the Company. In February 2011, the Company acquired BMP Sunstone Corp. In April 2011, the Company acquired Genzyme Corporation. Analysis Guru Score: 100% SECTOR: [PASS] SNY 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. SNY's sales of $47,081.7 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. SNY's current ratio of 2.30 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 SNY is $9,892.6 million, while the net current assets are $22,315.8 million. SNY 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. SNY's EPS growth over that period of 141.7% 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. SNY's P/E of 13.79 (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. SNY's Price/Book ratio is 1.28, while the P/E is 13.79. SNY passes the Price/Book test.   GAMESTOP CORP. Profile Strategy: Value Investor Based on: Benjamin Graham GameStop Corp. (GameStop) is a retailer of video game products and personal computer (PC) entertainment software. The Company sells new and used video game hardware, video game software and accessories, as well as PC entertainment software, and related accessories and other merchandise. As of January 30, 2010, the Company operated 6,450 stores in the United States, Australia, Canada and Europe, primarily under the names GameStop and EB Games. GameStop also operates the electronic commerce Website www.gamestop.com and publish Game Informer, a multi-platform video game magazine in the United States based on circulation, with approximately 4 million subscribers. During the fiscal year ended January 30, 2010 (fiscal 2009), GameStop operated its business in four segments: United States, Canada, Australia and Europe. Analysis Guru Score: 86% SECTOR: [PASS] GME 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. GME's sales of $9,672.4 million, based on trailing 12 month sales, pass this test. CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. GME's current ratio of 1.25 fails the test. LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for GME is $249.2 million, while the net current assets are $381.5 million. GME 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. GME's EPS growth over that period of 1,815.8% 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. GME's P/E of 10.90 (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. GME's Price/Book ratio is 1.25, while the P/E is 10.90. GME passes the Price/Book test.   SKECHERS USA, INC. Profile Strategy: Price/Sales Investor Based on: Kenneth Fisher Skechers U.S.A., Inc. (Skechers) design and market Skechers-branded contemporary footwear for men, women and children under several lines. addition to Skechers-branded lines, the Company also offers several designer, fashion and street-focused footwear lines for men, women and children. These lines are branded and marketed separately from Skechers and appeal to specific audiences. Its brands are sold through department stores, specialty stores, athletic retailers, and boutiques as well as catalog and Internet retailers. Along with wholesale distribution, its footwear is available at its e-commerce Website and its own retail stores. Skechers operates 90 concept stores, 92 factory outlet stores and 37 warehouse outlet stores in the United States, and 22 concept stores and five factory outlets internationally. The Company operates in four reportable segments: domestic wholesale sales, international wholesale sales, retail sales, and e-commerce sales. Analysis Guru Score: 80% PRICE/SALES RATIO: [PASS] The prospective company should have a low Price/Sales ratio. Non-cyclical (non-Smokestack) companies with Price/Sales ratios below 0.75 are tremendous values and should be sought. SKX's P/S of 0.34 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. SKX's Debt/Equity of 9.68% 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. SKX 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 SKX At this Point Is SKX 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.SKX's P/S ratio of 0.34 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%. SKX's inflation adjusted EPS growth rate of 16.66% passes the test. FREE CASH PER SHARE: [FAIL] 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. SKX's free cash per share of -2.64 fails this criterion. THREE YEAR AVERAGE NET PROFIT MARGIN: [FAIL] This methodology looks for companies that have an average net profit margin of 5% or greater over a three year period. SKX, whose three year net profit margin averages 4.81%, fails this evaluation.   Watch List The Watch List contains the highest scoring stocks according to our guru consensus system that are not currently in the Hot List portfolio. We provide this list both for informational purposes and for investors who are not comfortable with a portfolio of ten stocks. Ticker Company Name Industry Guru Score INTC INTEL CORPORATION Semiconductors 54 HUM HUMANA INC. Insurance (Accident & Health) 53 FRX FOREST LABORATORIES, INC. Biotechnology & Drugs 52 CW CURTISS-WRIGHT CORP. Misc. Fabricated Products 51 WDC WESTERN DIGITAL CORP. Computer Storage Devices 50 FCFS FIRST CASH FINANCIAL SERVICES, INC. Retail (Specialty) 49 BAP CREDICORP LTD. (USA) Regional Banks 49 PLCE CHILDREN'S PLACE RETAIL STORES, INC. Retail (Apparel) 49 TX TERNIUM S.A. (ADR) Iron & Steel 49 HANS HANSEN NATURAL CORPORATION Beverages (Non-Alcoholic) 48

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