The Economy

The market ended the year on a relatively quiet note, although the gains for the major benchmarks for the year were slightly above their long term averages. Through Dec. 28th, the S&P 500 was up 12.5%, the NASDAQ was up 8.6% and the Dow 30 is up 16.9%. The market has come a long way since the February low. To put it in perspective, the S&P 500 touched a low of 1829 on February 11th of this year. The current value of the index is 2247.38, representing a gain of approximately 23%.

In the Dec. 23rd episode of Consuelo Mack's WealthTrack, money manager and strategist Richard Bernstein explained how there was a "seismic investment shift" in the market that began in February of this year. The market, and the economy, started to awaken from the long hangover from the financial crisis (working off debt and coming out of the deflationary environment). There wasn't a specific catalyst in February, as Bernstein points out, although as the year went on, with Brexit and the Trump victory, the potential for better growth and more inflation ushered in a whole new leadership group in the market. Value and low quality stocks, financials, technology and cyclicals all started to outperform while the defensive names, bonds and other areas of the market that tend to do better in a slow growth, falling rate environment got left behind.

As we move into the New Year, a few things will be in focus. The new Trump administration has indicated it will make many policy changes and the market is discounting much of this as good new, which he fueled the recent rally. How many of these policies get implemented, and at what speed, will certainly impact the markets. Changes to the tax code may have a direct positive impact on stocks due to higher growth, but also could be a short-term negative in early 2017 because lower income tax rates may have delayed selling in 2016 that will eventually catch up in 2017. Business investment has been relatively modest since the Financial crisis, but the expectation for higher growth and a more pro-business administration could help give U.S. corporations the confidence they need to start more aggressively investing in their businesses (vs. share buybacks and dividends).

On the individual investor front, ownership of stocks in American households is at a very low level, and 2017 could be the year where individual investors start feeling good about stocks again, even though at extreme levels that can be a sign of the market starting to top out.

On the economic front, U.S. GDP was revised upward for the third quarter of 2016. The initial reading of 3.2% increased 0.3% to 3.5%. The average of the first three quarters' growth rates is 1.9%, which is still well below the long term average of GDP growth post World War II, but the stronger recent figures, along with improved expectations paint a better growth story ahead for the U.S. economy.

Consumer confidence as measured by the Conference Board Consumer Confidence index jumped in December to 113.7, compared to 109.4 in the month earlier. Confidence was strongest in older consumers. This was the highest reading of consumer confidence since 2001. One potential issue facing U.S. multi-national companies is the sharp increase in the U.S. dollar. The dollar has strengthen since the Nov. elections, as the market prices in a stronger U.S. economy. As a result, U.S. manufactured goods now look expensive compared to non-U.S. goods. This could have a negative impact on sales, and some firms, including 3M, UTC and Caterpillar are on record saying that the strength of the dollar will impact revenue in 2017.

The increase in interest rates have led to higher mortgage rates and higher borrowing costs will most likely impact the demand for housing, but the trailing S&P CoreLogic Case-Shiller city index, which measures housing prices in major markets across the country, increased 5.6% over the past 12 months as of the end of October. According to a WSJ article, the "hottest markets in the country remain concentrated in the Northwest, as many buyers priced out of the Silicon Valley area flee to secondary tech hubs."

According to FactSet's Earnings Insight, in the fourth quarter 77 S&P 500 companies have issued negative guidance while 34 have issued positive outlooks. Of the companies that have reported earnings, 68% have delivered profits ahead of expectations. We need to keep our eye on this earnings trend. On a valuation front, the S&P trades at forward P/E of 17.1, using the 12-month forward looking EPS estimates so earnings growth will likely need to continue to increase to keep the market going up.

Performance Update

Since our last newsletter, the S&P 500 returned -0.6%, while the Hot List returned -0.1%. So far in 2016, the portfolio has returned 10.4% vs. 10.0% for the S&P. Since its inception in July 2003, the Hot List is far outpacing the index, having gained 211.0% vs. the S&P's 124.8% gain.

Featured Article

This week we begin a series where we will feature an excerpt from one of our recent articles in the Hot List periodically. For our first article, we take a look at the effect of weighting indices based on market cap vs. equal and fundamental weighting. This article was published December 28, 2016 in Canada's Globe and Mail newspaper.

The 10 Most Fundamentally Attractive Stocks in the S&P 500

At a time when the Standard & Poor's 500 index is beating records on a regular basis and most professional managers are underperforming it, it might seem impossible to beat the benchmark merely by holding the same exact stocks within it. But long-term data suggest you can beat the market by doing exactly that.

As its name suggests, the S&P 500 holds 500 stocks, but each is held in proportion to its market capitalization. That makes it skewed toward large companies, such as technology giant Apple and the energy stalwart Exxon Mobil.

But some funds track an index that holds each component of the S&P 500 at an equal weighting, not favouring big companies over others. And this causes a significantly different weighting of securities, one that gives a mid-cap regional bank such as Zions Bancorp equal footing to a telecommunications giant such as AT&T.

Since it began in 2003 through mid-December, 2016, the Guggenheim S&P 500 Equal Weight exchange-traded fund, which tracks this different measurement, is up 246 per cent versus a 145-per-cent gain for the SPDR S&P 500 ETF Trust, the fund that tracks the standard market-cap-weighted benchmark. This means a $1,000,000 (U.S.) investment would be worth $3.4-million if invested in the equally weighted fund compared with $2.5-million in the S&P.

If you are a diehard passive investor who thinks market-cap weighted indexing is the only way to win, I am guessing I got your attention. The equal-weight strategy covers for a few flaws in the market-cap style. It keeps the investor from overinvesting in hot, expensive and overbought stocks. And it reduces the risk of overexposure to a handful of stocks because it doesn't invest according to market-weights. Apple and Microsoft alone make up more than 5 per cent of the standard S&P index, and technology stocks in general make up nearly 20 per cent. Together, those two tech giants don't make up more than half of 1 per cent of the equally weighted index, which has less concentration to technology and more to financial services.

And because the equal-weight index is rebalanced every quarter to maintain its underlying stock mix, the index methodology has a systematic mechanism that results in funds being allocated to stocks that have sold off, effectively bringing them back to equal weight, and taking money off the table of the stocks that have gone up.

Often the smaller the stock, the more risky the shares may be. This proves out, but only to a small extent, in the risk numbers when comparing the equal weight S&P fund with the market-cap weighted one. Over the past 10 years, the equally weighted S&P fund has exhibited slightly higher volatility. In 2008, the equally weighted fund lost more than 40 per cent compared with a decline of 38.6 per cent for the market-cap-weighted S&P fund, but in 2009 the equally weighted fund was up more than 44 per cent compared with 26.3 per cent for the regular S&P 500. There are times, however, when the leadership in the market gets very narrow, a problem for an equal-weighted fund. In 2015, the acronym FANG - which stands for Facebook, Amazon, Netflix and Google - got popular mostly because it was these few stocks that were driving most of the returns in indexes such as the S&P 500 and Nasdaq. When the leadership in the market narrows, and the largest stocks are doing best, an equally weighted portfolio is likely to struggle. However, because of that, you get rewarded on the back side when the average stock starts to perform much better. For instance, in 2016, the equally weighted fund is up 16 per cent year-to-date versus 13.4 per cent for the S&P market-cap weighted fund.

Investors who want a rules-based approach to passive investing and understand the downside to market cap weightings, but want to beat the S&P 500 at its own game, might want to consider an equally weighted approach.

Taking the concept a step further, funds have begun to emerge who use long-term data to weight the index, and the initial results are promising there as well. For example, it has been proven over time that small stocks outperform large ones and that value stocks that trade at discounts relative to things like earnings, book value and sales, outperform the market in general. So using that data, the S&P 500 can be ranked according to relative value, dividends and other fundamentals in order to weight the stocks that data suggest will outperform more heavily over the long term.

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Portfolio Holdings
Ticker Date Added Return
SAFM 11/18/2016 16.3%
BMA 7/1/2016 -13.6%
THO 12/16/2016 -3.3%
TREX 12/16/2016 -1.2%
IBTX 12/16/2016 0.2%
WDR 11/18/2016 1.4%
LUKOY 12/16/2016 3.9%
UFPI 12/16/2016 1.8%
SWHC 12/16/2016 -1.2%
RGR 11/18/2016 -0.8%


Guru 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

SAFM   |   BMA   |   THO   |   TREX   |   IBTX   |   WDR   |   LUKOY   |   UFPI   |   SWHC   |   RGR   |  

SANDERSON FARMS, INC.

Strategy: Price/Sales Investor
Based on: Kenneth Fisher

Sanderson Farms, Inc. is a poultry processing company. The Company is engaged in the production, processing, marketing and distribution of fresh and frozen chicken, and the preparation, processing, marketing and distribution of processed and prepared chicken items. The Company sells ice pack, chill pack, bulk pack and frozen chicken, in whole, cut-up and boneless form, primarily under the Sanderson Farms brand name to retailers, distributors and casual dining operators principally in the southeastern, southwestern, northeastern and western United States, and to customers reselling frozen chicken into export markets. The Company conducts its chicken operations through Sanderson Farms, Inc. (Production Division) and Sanderson Farms, Inc. (Processing Division), and its prepared chicken business through Sanderson Farms, Inc. (Foods Division). Its prepared chicken product line includes approximately 70 institutional and consumer packaged partially cooked or marinated chicken items.


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. SAFM's P/S ratio of 0.76 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. SAFM'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. SAFM is neither a Technology nor Medical company. Therefore the Price/Research ratio is not available and, hence, not much emphasis should be placed on this particular variable.


PRELIMINARY GRADE: Some Interest in SAFM At this Point

Is SAFM a "Super Stock"? 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, SAFM, who has a P/S of 0.76, 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%. SAFM's inflation adjusted EPS growth rate of 23.19% passes the test.


FREE CASH PER SHARE: PASS

This methodology looks for companies that have a positive free cash per share. Companies should have enough free cash available to sustain three years of losses. This is based on the premise that companies without cash will soon be out of business. SAFM's free cash per share of 2.21 passes this criterion.


THREE YEAR AVERAGE NET PROFIT MARGIN: PASS

This methodology looks for companies that have an average net profit margin of 5% or greater over a three year period. SAFM, whose three year net profit margin averages 7.80%, passes this evaluation.

BANCO MACRO SA (ADR)

Strategy: P/E/Growth Investor
Based on: Peter Lynch

Banco Macro SA is an Argnetina-based financial institution (the Bank) that offers traditional bank products and services to companies, including those operating in regional economies, as well as to individuals. In addition, the Bank performs certain transactions through its subsidiaries, including mainly Banco del Tucuman, Macro Bank Ltd, Macro Securities SA, Macro Fiducia SA and Macro Fondos SGFCI SA. It has approximately two categories of customers, such as retail customers, including individuals and entrepreneurs and corporate customers, which include small, medium and large companies and major corporations. In addition, it provides services to over four provincial governments. It provides its corporate customers with traditional banking products and services, such as deposits, lending (including overdraft facilities), check cashing advances and factoring, guaranteed loans and credit lines for financing foreign trade and cash management services.


DETERMINE THE CLASSIFICATION:

This methodology would consider BMA a "fast-grower".


P/E/GROWTH RATIO: PASS

The investor should examine the P/E (8.73) relative to the growth rate (44.10%), based on the average of the 3, 4 and 5 year historical eps growth rates, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for BMA (0.20) is very favorable.


SALES AND P/E RATIO: PASS

For companies with sales greater than $1 billion, this methodology likes to see that the P/E ratio remain below 40. Large companies can have a difficult time maintaining a growth high enough to support a P/E above this threshold. BMA, whose sales are $1,742.1 million, needs to have a P/E below 40 to pass this criterion. BMA's P/E of (8.73) is considered acceptable.


EPS GROWTH RATE: PASS

This methodology favors companies that have several years of fast earnings growth, as these companies have a proven formula for growth that in many cases can continue many more years. This methodology likes to see earnings growth in the range of 20% to 50%, as earnings growth over 50% may be unsustainable. The EPS growth rate for BMA is 44.1%, based on the average of the 3, 4 and 5 year historical eps growth rates, which is considered 'OK'. However, it may be difficult to sustain such a high growth rate.


TOTAL DEBT/EQUITY RATIO: NEUTRAL

BMA is a financial company so debt to equity rules are not applied to determine the company's financial soundness.


EQUITY/ASSETS RATIO: PASS

This methodology uses the Equity/Assets Ratio as a way to determine a financial intermediary's health, as it is a better measure than the Debt/Equity Ratio. BMA's Equity/Assets ratio (15.00%) is very healthy and above the minimum 5% this methodology looks for, thus passing the criterion.


RETURN ON ASSETS: PASS

This methodology uses Return on Assets as a way to measure a financial intermediary's profitability. BMA's ROA (5.86%) is above the minimum 1% that this methodology looks for, thus passing the criterion.


FREE CASH FLOW: NEUTRAL

The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it is above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for BMA (7.02%) 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 BMA (-1.97%) 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.

THOR INDUSTRIES, INC.

Strategy: P/E/Growth Investor
Based on: Peter Lynch

Thor Industries, Inc. manufactures a range of recreational vehicles (RVs) in the United States and sells those vehicles primarily in the United States and Canada. The Company's segments include towable recreational vehicles, which consists of the operations of Airstream, Inc. (Airstream) (towable); Heartland Recreational Vehicles, LLC (Heartland) (including Bison Coach, LLC (Bison), Cruiser RV, LLC (CRV) and DRV, LLC (DRV)); Jayco, Corp. (Jayco) (including Jayco towable, Starcraft and Highland Ridge), Keystone RV Company (Keystone) (including CrossRoads and Dutchmen) and K.Z., Inc. (KZ) (including Livin' Lite RV, Inc. (Livin' Lite)); motorized recreational vehicles, which consists of the operations of Airstream (motorized), Jayco (including Jayco motorized and Entegra Coach) and Thor Motor Coach, Inc. (Thor Motor Coach), and Other, which includes the operations of its subsidiary, Postle Operating, LLC (Postle).


DETERMINE THE CLASSIFICATION:

This methodology would consider THO a "fast-grower".


P/E/GROWTH RATIO: PASS

The investor should examine the P/E (18.54) relative to the growth rate (22.61%), based on the average of the 3, 4 and 5 year historical eps growth rates, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for THO (0.82) makes it favorable.


SALES AND P/E RATIO: PASS

For companies with sales greater than $1 billion, this methodology likes to see that the P/E ratio remain below 40. Large companies can have a difficult time maintaining a growth high enough to support a P/E above this threshold. THO, whose sales are $5,260.3 million, needs to have a P/E below 40 to pass this criterion. THO's P/E of (18.54) is considered acceptable.


INVENTORY TO SALES: PASS

When inventories increase faster than sales, it is a red flag. However an increase of up to 5% is considered bearable if all other ratios appear attractive. Inventory to sales for THO was 6.14% last year, while for this year it is 8.81%. Since inventory has been rising, this methodology would not look favorably at the stock but would not completely eliminate it from consideration as the inventory increase (2.67%) is below 5%.


EPS GROWTH RATE: PASS

This methodology favors companies that have several years of fast earnings growth, as these companies have a proven formula for growth that in many cases can continue many more years. This methodology likes to see earnings growth in the range of 20% to 50%, as earnings growth over 50% may be unsustainable. The EPS growth rate for THO is 22.6%, based on the average of the 3, 4 and 5 year historical eps growth rates, which is considered very good.


TOTAL DEBT/EQUITY RATIO: PASS

This methodology would consider the Debt/Equity ratio for THO (25.65%) to be acceptable (equity is three to ten times debt). This ratio is one quick way to determine the financial strength of the company.


FREE CASH FLOW: NEUTRAL

The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it is above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for THO (4.27%) 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 THO (-2.44%) 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.

TREX COMPANY INC

Strategy: Growth Investor
Based on: Martin Zweig

Trex Company, Inc. is a manufacturer of wood-alternative decking and railing products. The Company markets its products under the brand name Trex. The Company offers a set of outdoor living products in the decking, railing, porch, fencing, trim, steel deck framing and outdoor lighting categories. Its decking products include Trex Transcend, Trex Enhance and Trex Select. The Company's railing products include Trex Transcend Railing, Trex Select Railing and Trex Reveal aluminum railing. It offers Trex Transcend Porch Flooring and Railing System, a porch product, and a fencing product called Trex Seclusions. The Company offers TrexTrim product, which is a cellular polyvinyl chloride residential exterior trim product. It offers a triple-coated steel deck framing system called Trex Elevations. The Company offers outdoor lighting systems, including Trex DeckLighting and Trex Landscape Lighting. It also offers Trex Hideaway, which a hidden fastening system for grooved boards.


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. TREX's P/E is 31.87, 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: 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. TREX's revenue growth is 13.00%, while it's earnings growth rate is 84.18%, based on the average of the 3 and 4 year historical eps growth rates using the current fiscal year eps estimate. Therefore, TREX 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 (12.9%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (7.1%) of the current year. Sales growth for the prior must be greater than the latter. For TREX 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. TREX's EPS ($0.23) pass this test.


QUARTERLY EARNINGS ONE YEAR AGO: PASS

The EPS for the quarter one year ago must be positive. TREX's EPS for this quarter last year ($0.12) 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. TREX's growth rate of 91.67% passes this test.


EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: FAIL

Compare the earnings growth rate of the previous three quarters with long-term EPS growth rate. Earnings growth in the previous 3 quarters should be at least half of the long-term EPS growth rate. Half of the long-term EPS growth rate for TREX is 42.09%. This should be less than the growth rates for the 3 previous quarters which are 62.50%, 41.82% and 36.21%. TREX does not pass this test, which means that it does not have good, reasonably steady earnings.


This strategy looks at the rate which earnings grow and evaluates this rate of growth from different angles. The 4 tests immediately following are detailed below.


EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3 QUARTERS: PASS

If the growth rate of the prior three quarter's earnings, 41.86%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 91.67%, (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, 91.67% must be greater than or equal to the historical growth which is 84.18%. TREX would therefore pass this test.


EARNINGS PERSISTENCE: PASS

Companies must show persistent yearly earnings growth. To fulfill this requirement a company's earnings must increase each year for a five year period. TREX, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were -0.38, 0.08, 1.01, 1.27 and 1.52, passes this test.


LONG-TERM EPS GROWTH: PASS

One final earnings test required is that the long-term earnings growth rate must be at least 15% per year. TREX's long-term growth rate of 84.18%, 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. TREX's Debt/Equity (0.00%) is not considered high relative to its industry (96.04%) 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 TREX, this criterion has not been met (insider sell transactions are 1,175, while insiders buying number 384). 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.

INDEPENDENT BANK GROUP INC

Strategy: Growth Investor
Based on: Martin Zweig

Independent Bank Group, Inc. is a bank holding company. Through the Company's subsidiary, Independent Bank (the Bank), it provides a range of commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. Its commercial lending products include owner-occupied commercial real estate loans, interim construction loans, commercial loans to a mix of small and midsized businesses, and loans to professionals, particularly medical practices. Its retail lending products include residential first and second mortgage loans and consumer installment loans, such as loans to purchase cars, boats and other recreational vehicles. The Company operates approximately 40 banking offices in the Dallas-Fort Worth metropolitan area, the Austin/Central Texas area, and the Houston metropolitan area. The Company also provides wealth management services to its customers, including investment advisory and other related services.


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. IBTX's P/E is 23.45, 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. IBTX's revenue growth is 30.68%, while it's earnings growth rate is 1.59%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, IBTX 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 (22.3%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (21.5%) of the current year. Sales growth for the prior must be greater than the latter. For IBTX 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. IBTX's EPS ($0.78) pass this test.


QUARTERLY EARNINGS ONE YEAR AGO: PASS

The EPS for the quarter one year ago must be positive. IBTX's EPS for this quarter last year ($0.47) 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. IBTX's growth rate of 65.96% passes this test.


EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: FAIL

Compare the earnings growth rate of the previous three quarters with long-term EPS growth rate. Earnings growth in the previous 3 quarters should be at least half of the long-term EPS growth rate. Half of the long-term EPS growth rate for IBTX is 0.80%. This should be less than the growth rates for the 3 previous quarters which are -1.72%, 21.82% and 3.28%. IBTX does not pass this test, which means that it does not have good, reasonably steady earnings.


This strategy looks at the rate which earnings grow and evaluates this rate of growth from different angles. The 4 tests immediately following are detailed below.


EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3 QUARTERS: PASS

If the growth rate of the prior three quarter's earnings, 7.47%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 65.96%, (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, 65.96% must be greater than or equal to the historical growth which is 1.59%. IBTX 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. IBTX, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 2.00, 2.23, 1.77, 1.85, and 2.21, fails this test.


LONG-TERM EPS GROWTH: FAIL

The final important criterion in this approach is that Earnings Growth be at least 15% per year. IBTX's long-term growth rate of 1.59%, based on the average of the 3, 4 and 5 year historical eps growth rates, fails the minimum required.


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 IBTX, this criterion has not been met (insider sell transactions are 35, while insiders buying number 143). Despite the lack of an insider buy signal, there also is not an insider sell signal, so the stock passes this criterion.

WADDELL & REED FINANCIAL, INC.

Strategy: Growth Investor
Based on: Martin Zweig

Waddell & Reed Financial, Inc. is a mutual fund and asset management company. The Company provides investment management, investment advisory, investment product underwriting and distribution and shareholder services administration to Waddell & Reed Advisors group of mutual funds, Ivy Funds, Ivy Funds Variable Insurance Portfolios, InvestEd Portfolios and 529 college savings plan (collectively, the Funds), and the Ivy Global Investors Fund SICAV and its Ivy Global Investors sub-funds (the IGI Funds), and institutional and separately managed accounts. Its retail products are distributed through third parties, such as other broker/dealers, registered investment advisors and various retirement platforms or through its sales force of independent financial advisors. The Company also markets its investment advisory services to institutional investors, either directly or through consultants. It operates its investment advisory business through Waddell & Reed Investment Management Company.


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. WDR's P/E is 8.56, 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. WDR's revenue growth is 8.60%, while it's earnings growth rate is 9.88%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, WDR 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 (-19.4%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (-19%) of the current year. Sales growth for the prior must be greater than the latter. For WDR 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. WDR's EPS ($0.65) pass this test.


QUARTERLY EARNINGS ONE YEAR AGO: PASS

The EPS for the quarter one year ago must be positive. WDR'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. WDR's growth rate of 12.07% passes this test.


EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: FAIL

Compare the earnings growth rate of the past four quarters with long-term EPS growth rate. Earnings growth in the past 4 quarters should be at least half of the long-term EPS growth rate. A stock should not be considered if it posted several quarters of skimpy earnings. WDR had 3 quarters of skimpy growth in the last 2 years.


This strategy looks at the rate which earnings grow and evaluates this rate of growth from different angles. The 4 tests immediately following are detailed below.


EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3 QUARTERS: PASS

If the growth rate of the prior three quarter's earnings, -36.96%, (versus the same three quarters a year earlier) is less than the growth rate of the current quarter earnings, 12.07%, (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, 12.07% must be greater than or equal to the historical growth which is 9.88%. WDR 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. WDR, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 2.01, 2.25, 2.96, 3.71, and 2.94, fails this test.


LONG-TERM EPS GROWTH: FAIL

The final important criterion in this approach is that Earnings Growth be at least 15% per year. WDR's long-term growth rate of 9.88%, based on the average of the 3, 4 and 5 year historical eps growth rates, fails the minimum required.


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 WDR, this criterion has not been met (insider sell transactions are 85, while insiders buying number 7). 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.

NK LUKOIL PAO (ADR)

Strategy: Contrarian Investor
Based on: David Dreman

NK LUKOIL PAO is an energy company. The primary activities of LUKOIL and its subsidiaries are oil exploration, production, refining, marketing and distribution. The Company's segments include Exploration and Production; Refining, Marketing and Distribution, and Corporate and other. The Exploration and Production segment includes its exploration, development and production operations relating to crude oil and gas. These activities are located within Russia, with additional activities in Azerbaijan, Kazakhstan, Uzbekistan, the Middle East, Northern and Western Africa, Norway, Romania and Mexico. In addition to its production, the Company purchases crude oil in Russia and on international markets. The Refining, Marketing and Distribution segment includes refining, petrochemical and transport operations, marketing and trading of crude oil, natural gas and refined products, generation, transportation and sales of electricity, heat and related services.

MARKET CAP: PASS

Medium to large-sized companies (the largest 1500 companies) should be chosen, because they are more in the public eye. Furthermore, the investor is exposed to less risk of "accounting gimmickry", and companies of this size have more staying power. LUKOY has a market cap of $48,175 million, therefore passing the test.


EARNINGS TREND: PASS

A company should show a rising trend in the reported earnings for the most recent quarters. LUKOY's EPS for the past 2 quarters, (from earliest to most recent quarter) 1.26, 1.27 have been increasing, and therefore the company passes this test.


EPS GROWTH RATE IN THE IMMEDIATE PAST AND FUTURE: FAIL

This methodology likes to see companies with an EPS growth rate higher than the S&P in the immediate past and a likelihood that this trend will continue in the near future. LUKOY fails this test as its EPS growth rate for the past 6 months (-11.80%) does not beat that of the S&P (24.30%).


This methodology would utilize four separate criteria to determine if LUKOY is a contrarian stock. In order to eliminate weak companies we have stipulated that the stock should pass at least two of the following four major criteria in order to receive "Some Interest".


P/E RATIO: PASS

The P/E of a company should be in the bottom 20% of the overall market. LUKOY's P/E of 7.50, based on trailing 12 month earnings, meets the bottom 20% criterion (below 13.48), and therefore passes this test.


PRICE/CASH FLOW (P/CF) RATIO: PASS

The P/CF of a company should be in the bottom 20% of the overall market. LUKOY's P/CF of 5.57 meets the bottom 20% criterion (below 7.49) and therefore passes this test.


PRICE/BOOK (P/B) VALUE: PASS

The P/B value of a company should be in the bottom 20% of the overall market. LUKOY's P/B is currently 0.74, which meets the bottom 20% criterion (below 1.05), and it therefore passes this test.


PRICE/DIVIDEND (P/D) RATIO: PASS

The P/D ratio for a company should be in the bottom 20% of the overall market (that is the yield should be in the top 20%). LUKOY's P/D of 15.22 meets the bottom 20% criterion (below 20.24), and it therefore passes this test.


This methodology maintains that investors should look for as many healthy financial ratios as possible to ascertain the financial strength of the company. These criteria are detailed below.


CURRENT RATIO: FAIL

A prospective company must have a strong Current Ratio (greater than or equal to the average of it's industry [1.76] or greater than 2). This is one identifier of financially strong companies, according to this methodology. LUKOY's current ratio of 1.71 fails the test.


PAYOUT RATIO: PASS

A good indicator that a company has the ability to raise its dividend is a low payout ratio. The payout ratio for LUKOY is 0.00%. Unfortunately, its historical payout ratio is not available. Nonetheless it passes the payout criterion, as this is a very low payout.


RETURN ON EQUITY: FAIL

The company should have a high ROE, as this helps to ensure that there are no structural flaws in the company. This methodology feels that the ROE should be greater than the top one third of ROE from among the top 1500 largest cap stocks, which is 16.11%, and would consider anything over 27% to be staggering. The ROE for LUKOY of 7.32% is not high enough to pass this criterion.


PRE-TAX PROFIT MARGINS: FAIL

This methodology looks for pre-tax profit margins of at least 8%, and considers anything over 22% to be phenomenal. LUKOY's pre-tax profit margin is 7.69%, thus failing this criterion.


YIELD: PASS

The company in question should have a yield that is high and that can be maintained or increased. LUKOY's current yield is 6.57%, while the market yield is 2.64%. LUKOY passes this test.


LOOK AT THE TOTAL DEBT/EQUITY: PASS

The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry of 50.21%. LUKOY's Total Debt/Equity of 27.53% is considered acceptable.

UNIVERSAL FOREST PRODUCTS, INC.

Strategy: Growth Investor
Based on: Martin Zweig

Universal Forest Products, Inc. is a holding company. The Company, through its subsidiaries, supplies wood, wood composite and other products to three primary markets: retail, construction and industrial. Its industrial market serves as industrial manufacturers and other customers for packaging, material handling and other applications. The Company's segments include North, South, West, Alternative Materials, International and Corporate divisions. The Company designs, manufactures and markets wood and wood-alternative products for national home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for residential and commercial construction, and specialty wood packaging, components and packing materials for various industries. The Company's construction market consists of customers in three submarkets, including manufactured housing, residential construction and commercial construction.


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. UFPI's P/E is 21.31, 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: 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. UFPI's revenue growth is 10.96%, while it's earnings growth rate is 62.44%, based on the average of the 3, 4 and 5 year historical eps growth rates. Therefore, UFPI 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 (8.4%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (4%) of the current year. Sales growth for the prior must be greater than the latter. For UFPI 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. UFPI's EPS ($1.36) pass this test.


QUARTERLY EARNINGS ONE YEAR AGO: PASS

The EPS for the quarter one year ago must be positive. UFPI's EPS for this quarter last year ($1.26) 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. UFPI's growth rate of 7.94% passes this test.


EARNINGS GROWTH RATE FOR THE PAST SEVERAL QUARTERS: FAIL

Compare the earnings growth rate of the previous three quarters with long-term EPS growth rate. Earnings growth in the previous 3 quarters should be at least half of the long-term EPS growth rate. Half of the long-term EPS growth rate for UFPI is 31.22%. This should be less than the growth rates for the 3 previous quarters which are 102.17%, 88.00% and 27.13%. UFPI does not pass this test, which means that it does not have good, reasonably steady earnings.


This strategy looks at the rate which earnings grow and evaluates this rate of growth from different angles. The 4 tests immediately following are detailed below.


EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3 QUARTERS: FAIL

If the growth rate of the prior three quarter's earnings, 56.00%, (versus the same three quarters a year earlier) is greater than the growth rate of the current quarter earnings, 7.94%, (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 UFPI is 7.9%, and it would therefore fail this test.


EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN THE HISTORICAL GROWTH RATE: FAIL

The EPS growth rate for the current quarter, 7.94% must be greater than or equal to the historical growth which is 62.44%. Since this is not the case UFPI would therefore fail this test.


EARNINGS PERSISTENCE: PASS

Companies must show persistent yearly earnings growth. To fulfill this requirement a company's earnings must increase each year for a five year period. UFPI, whose annual EPS growth before extraordinary items for the previous 5 years (from the earliest to the most recent fiscal year) were 0.23, 1.21, 2.15, 2.86 and 3.99, passes this test.


LONG-TERM EPS GROWTH: PASS

One final earnings test required is that the long-term earnings growth rate must be at least 15% per year. UFPI's long-term growth rate of 62.44%, 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. UFPI's Debt/Equity (15.04%) is not considered high relative to its industry (96.04%) 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 UFPI, this criterion has not been met (insider sell transactions are 336, while insiders buying number 830). Despite the lack of an insider buy signal, there also is not an insider sell signal, so the stock passes this criterion.

SMITH & WESSON HOLDING CORP

Strategy: P/E/Growth Investor
Based on: Peter Lynch

Smith & Wesson Holding Corporation is a manufacturer of firearms and a provider of accessory products for the shooting, hunting and rugged outdoor enthusiast. The Company operates through two segments: firearms and accessories. The firearm segment includes firearms, handcuffs and other related products sold through a distribution chain and direct sales to consumers and international, state and federal governments. The accessories segment consists of shooting, hunting and outdoor accessories. It manufactures an array of handguns, including revolvers and pistols; long guns, including modern sporting rifles, bolt action rifles and single shot rifles; handcuffs, and firearm-related products and accessories. It also provides shooting, hunting and outdoor accessories, including reloading, gunsmithing, gun cleaning supplies, tree saws and vault accessories. The Company sells its products under the Smith & Wesson, M&P, Thompson/Center Arms and Wheeler Engineering, among other brands.


DETERMINE THE CLASSIFICATION:

This methodology would consider SWHC a "fast-grower".


P/E/GROWTH RATIO: PASS

The investor should examine the P/E (8.93) relative to the growth rate (40.37%), based on the average of the 3, 4 and 5 year historical eps growth rates, for a company. This is a quick way of determining the fairness of the price. In this particular case, the P/E/G ratio for SWHC (0.22) is very favorable.


SALES AND P/E RATIO: NEUTRAL

For companies with sales greater than $1 billion, this methodology likes to see that the P/E ratio remain below 40. Large companies can have a difficult time maintaining a growth rate high enough to support a P/E above this threshold. SWHC, whose sales are $872.4 million, is not considered large enough to apply the P/E ratio analysis. However, an investor can analyze the P/E ratio relative to the EPS growth rate.


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 SWHC was 13.93% last year, while for this year it is 10.76%. Since inventory to sales has decreased from last year by -3.17%, SWHC passes this test.


EPS GROWTH RATE: PASS

This methodology favors companies that have several years of fast earnings growth, as these companies have a proven formula for growth that in many cases can continue many more years. This methodology likes to see earnings growth in the range of 20% to 50%, as earnings growth over 50% may be unsustainable. The EPS growth rate for SWHC is 40.4%, based on the average of the 3, 4 and 5 year historical eps growth rates, which is considered 'OK'. However, it may be difficult to sustain such a high growth rate.


TOTAL DEBT/EQUITY RATIO: PASS

This methodology would consider the Debt/Equity ratio for SWHC (51.69%) to be mediocre. If the Debt/Equity ratio is this high, the other ratios and financial statistics for SWHC 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 SWHC (11.63%) 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 SWHC (0.24%) 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.

STURM RUGER & COMPANY INC

Strategy: Value Investor
Based on: Benjamin Graham

Sturm, Ruger & Company, Inc. and subsidiary, is engaged in the design, manufacture and sale of firearms to domestic customers. The Company operates through two segments: firearms and castings. The firearms segment manufactures and sells rifles, pistols and revolvers to a range of federally licensed, independent wholesale distributors located in the United States. The castings segment manufactures and sells steel investment castings, and metal injection molding parts. Its castings segment provides castings and MIM parts for the Company's firearms segment. In addition, the castings segment produces some products for various customers in a range of industries. It offers products in three industry product categories: rifles, pistols and revolvers. Its firearms are sold through independent wholesale distributors to the commercial sporting market. It manufactures and sells investment castings made from steel alloys and metal injection molding parts for internal use in the firearms segment.


SECTOR: PASS

RGR 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. RGR's sales of $654.9 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. RGR's current ratio of 2.71 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 RGR is $0.0 million, while the net current assets are $145.9 million. RGR 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. RGR's EPS growth over that period of 1,926.4% 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. RGR's P/E of 14.70 (using the 3 year PE) passes this test.


PRICE/BOOK RATIO: FAIL

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. RGR's Price/Book ratio is 3.76, while the P/E is 14.70. RGR fails the Price/Book test.


Watch List

The top scoring stocks not currently in the Hot List portfolio.

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Score
BWLD BUFFALO WILD WINGS 91%
CSTE CAESARSTONE LTD 53%
SUPN SUPERNUS PHARMACEUTICALS INC 49%
FIZZ NATIONAL BEVERAGE CORP. 49%
VSI VITAMIN SHOPPE INC 49%
UVE UNIVERSAL INSURANCE HOLDINGS, INC. 48%
HIBB HIBBETT SPORTS, INC. 48%
IIIN INSTEEL INDUSTRIES INC 47%
TARO TARO PHARMACEUTICAL INDUSTRIES LTD. 47%
SLF SUN LIFE FINANCIAL INC 46%



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