Attached list of 27 companies we are adding to our recommended list at this time.

Annually, we take some time to think about the big picture trends that are driving the US economy and society, pick out interesting themes and trends, then consider those companies whose products and services  address those trends.

Simultaneously, we run several quantitative screens whose properties have shown over time to do a better than average job of picking companies whose stock prices are likely to outperform the stock market averages.  Generally, several hundred out of thousands of US publicly traded companies rise to the tops of these screens.

We then research the characteristics of these companies, eliminating those that have qualitative problems not detected by the quantitative screens, and then look for intersection with the big picture themes we have identified.  Out of this process, 20-30 companies are chosen for addition to our recommended list.

This year, the themes we’re focusing on are:

·         Technical education of the American work force

·         Products and services which target the aging of the baby boomer generation

·         Instruments which increase efficiency in medical and technology processes

·         Outsourcing solutions

·         Energy distribution

Of the 27 companies on this year’s list, most fall in the Mid-Cap category (Market Cap ranging from $1-15 billion.)  These companies have revenues in the range of $1-7 billion, large enough to give the company the advantages of market share, small enough to grow (it’s a lot easier to double sales from $1 billion than from $10 billion.)  On average, the companies have slightly higher Price/Earnings, Price/Book and Price/Sales ratios compared to the S&P 500, but we’re willing to pay up a little because, on average, these companies have forward growth prospects 50% higher than the S&P 500.

Over the next three months, as we rebalance existing portfolios and invest new cash, we’ll be adding several of these companies to each portfolio.