In developing a list of stocks for potential investment, Ulland Investment Advisors uses a large number of diverse sources of information. Meeting with company executives, their competitors, suppliers, and investors continues to be the most valuable source of information. In some situations, the Internet has replaced and supplemented traditional reliance on private or more exclusive research sources, although broker/dealer research is still an important source. Click here to see how we construct our portfolios.

Thorough analysis of a company's fundamentals is essential to successful investing. The six key factors we include:

• Growth rates: Companies with forecasted annual earnings and revenue growth of 15% or greater in our Intelligent Growth and Blend portfolios. Forecasted annual growth of 10% or greater for our Defensive Growth style.

• Strong financials and low long-term debt

• A significant portion of revenues invested in R&D expenditures

• A leading technology or market share position

• Experienced management with a history of success and truthfulness

• Management discipline in acquisition pricing and stock option distribution

Because of past patterns of high risk, certain industries are avoided as investments. These include the restaurant industry, retail, IPOs, gambling, tobacco, agriculture, and real estate related companies.

The next step in the investment selection process is determining value. The characteristics of a stock are compared with other securities in the same niche to establish the best relative values. The relationship between a company's growth rate and its price earnings ratio is key. Over time, the price earnings ratio will tend to rise toward the growth rate. Buying a stock at a P/E that is lower than, or at a discount to, the growth rate, provides both risk protection and higher returns.