ﬁ February 2014 Issue 2 - stocksuperstars.com · stocks such as Helen of Troy Lim-ited (Group 4: HELE), up 14.7%, and Alaska Air Group Inc. (Group 2: ALK), up 8.4%. But the dramatic

the portfolio during the month. The declines of these stocks trig-gered portfolio deletion alerts and highlight the importance of maintaining a diversifi ed portfolio. The weak performance of Nu Skin and LKQ Corp. pushed the perfor-mance of the SSR tracking port-folio below the benchmark, which declined 3.1% during January. The losses for these stocks were severe but moderated by being part of an overall portfolio. Both stocks will be sold with gains that exceed the benchmark return since they were added to the portfolio.

We are excited to announce a revamping of our website and email updates. We have taken three separate areas of the web-site that listed the holdings of the SSR portfolio and combined them

into a Superstars Portfolio page that allows you to study the overall portfolio holdings and better examine the ele-ments that drive the portfolio decisions of each of the four SSR strategies. Our revised email format responds to the greater use of mobile devices to read communica-tions.

After turning in a 44.0% gain during 2013, the SSR tracking portfolio retreated 5.3% in January (through January 29) as investors took profi ts amid concerns that market valuations have became rich relative to near-term economic prospects. In addition, inves-tors are facing gradual monetary tapering and an unstable global economy.

The SSR portfolio was boosted during January by the strong per-formance (through January 28) of stocks such as Helen of Troy Lim-ited (Group 4: HELE), up 14.7%, and Alaska Air Group Inc. (Group 2: ALK), up 8.4%. But the dramatic declines of Nu Skin Enterprises Inc. (Group 3: NUS), down 41.1%, and LKQ Corporation (Group 1: LKQ), down 19.1%, dominated

Volume 12Issue 2

We have also revised the bench-mark used to compare the overall performance of the SSR tracking portfolio to that of the market. We have switched from the Wilshire 5000 index, which provided a price change overview of the over-all market, to the exchange-traded fund (ETF) iShares Dow Jones U.S. (IYY), which not only gives a performance overview of the market, but also allows us to show a total return (price plus dividend reinvestment) for the domestic stock market, providing a better comparison fi gure.

The Portfolio Corner on page 12 details these changes.

Portfolio ChangesThe continued strength of Gilead

Sciences Inc. (Group 1: GILD) pushed the weighting of the stock to 2.6 times the average stock posi-tion in the SSR tracking portfolio. As you may recall, we instituted a rule last December that caps the weighting of any single stock in our 36 stock tracking portfolio to 2.5 times the desired average posi-tion size. When a stock’s weighting exceeds this limit and no other portfolio deletion rules are being violated, the holding will be pared down to 1.5 times the desired average position size. Therefore, Gilead’s position will be reduced to 1.5 times the average portfolio

February 2014

The Stock Superstars Report illustrates how to build and manage a well-diversifi ed portfolio with controlled risk. Our goal is to create a portfolio that provides investment information and refl ects an approach consistent with current research fi ndings.

“The American Association of Individual Investors is an independent nonprofi t corporation formed in 1978 for the purpose of assisting individuals in becoming effective managers of their own assets through programs of education, information and research.”

www.stocksuperstars.comSSR Phone Hotline: 866-801-2576

In This IssueIn This IssuePortfolio Alerts This Month . . . . . . . . . . . . . . . . . . . . 2Performance of SSR . . . . . . . . . . . . . . . . . . . . . . . . . . . 3SSR Stocks in the News. . . . . . . . . . . . . . . . . . . . . . . . 5Recent Earnings Announcements . . . . . . . . . . . . . . 5The Current SSR Portfolio . . . . . . . . . . . . . . . . . . . . . 6In-Depth Stock Reports Jazz Pharmaceuticals . . . . . . . . . . . . . . 8 American Express . . . . . . . . . . . . . . . . . . 9 National Oilwell Varco . . . . . . . . . . . . 10 American Vanguard Corp. . . . . . . . . . . 11Portfolio Corner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Next Publication Date: February 28, 2014

2 February 2014

Stock Superstars Report

position and the proceeds will be added to the cash used to purchase this month’s portfolio additions.

Portfolio Deletion AlertsWe have two portfolio deletions

for the month: LKQ Corporation (LKQ) in Group 1 and Nu Skin En-terprises Inc. (NUS) in Group 3.

LKQ Corporation provides re-placement parts, components and systems needed to repair cars and trucks. The stock price was fi rst hurt by claims from a short seller that LKQ has been using acquisi-tions to boost reported income at the cost of actual free cash fl ow. A report issued by the short seller also suggested that LKQ will face stiffer competition and the likeli-hood of lower margins from a stronger push by original equip-ment manufacturers in the replace-

ment part marketplace. The stock price further suffered

when a complaint was fi led against LKQ by the Chrysler Group in the U.S. District Court in the Eastern District of Michigan. The lawsuit contends that certain aftermarket parts LKQ sells infringe Chrys-ler design patents relating to the Dodge Ram pickup truck. LKQ said, “We believe that the lawsuit is without merit and will defend it vigorously. Moreover, the parts we sell that allegedly relate to these design patents represent an imma-terial amount of our revenue.”

While the stock price has bounced back from the original declines, its weak relative price strength dictates that LKQ be deleted from Group 1 of the SSR portfolio. The SSR Group 1 strat-egy looks for companies with a

consistent track record of annual and quarterly earnings growth coupled with strong relative price strength. A portfolio addition alert was issued for LKQ on Febru-ary 3, 2012. The stock has gained 63.4% since purchase, while the iShares Dow

Jones U.S. ETF has gained 31.9% over the same time frame.

Nu Skin Enterprises develops and distributes anti-aging per-sonal care products and nutritional supplements through a direct sell network in 53 markets worldwide. Shares of Nu Skin lost over 40% during January after a report in the Chinese People’s Daily news-paper suggested that the multilevel marketing company operates an illegal pyramid scheme. The story carried a headline that translates to “Watch How Nu Skin Fabricates Lies” and claimed Nu Skin uses direct-marketing methods that are akin to “brain washing.” Following the report, Nu Skin issued a re-sponse stating that the article con-tained “inaccuracies and exaggera-tions that are not representative of Nu Skin’s business in China.” Nu

February Portfolio Additions:

Group Company (Ticker)Latest Price (1/29/2014)

RiskIndex Description

1 Jazz Pharmaceuticals PLC (JAZZ) $151.62 2.964 American Vanguard Corp. (AVD) $23.54 3.30

Portfolio Deletions Since Last Monthly Issue:

Date Price*1 LKQ Corporation (LKQ) 1/31/2014 $26.52 63.4% 31.9% 2/3/20123 Nu Skin Enterprises, Inc. (NUS) 1/31/2014 $80.51 83.1% 15.0% 3/28/2013

Portfolio Rebalancing Action

*Data as of 1/29/2014.Reducing position of Gilead Sciences, Inc. (Group 1: GILD) to 1.5 times average portfolio holding size.

biopharmaceuticals for narcolepsy, schizophrenia, OCDchemical mfr for agricultural & commerical uses

GroupPortfolio Deletion Alert G/L Since

Purchase*

iShares DJ U.S. (IYY) Change

Since Purchase*Portfolio Addition Alert

DateCompany (Ticker)

Portfolio Alerts This Month

Published monthly by the AmericanAssociation of Individual Investors625 N. Michigan Ave., Chicago, IL 60611,312-280-0170, www.aaii.com.Annual SSR subscription, $199.

AAII’s Stock Superstars Report® (SSR) is not a registered investment adviser or a broker/dealer. This report is issued solely for informational purposes and

should not be construed as an offer to sell or the solicitation of an offer to buy securities. The opinions and analyses included herein are based on sources believed to be reliable and written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of

timeliness of, or any delay or interruptions in, the transmission thereof to the users. All information contained in this report should be independently verifi ed with the companies mentioned.

© American Association of Individual Investors, 2014. The Stock Superstars Report is a registered trademark and service mark of the American Association of Individual Investors. This publication may not be reproduced in whole or in part by any means without prior written consent.

“The American Association of Individual Investors is an independent nonprofi t corporation formed in 1978 for the purpose of assisting individuals in becoming effective managers of their own assets through programs of education, information and research.”

Printed in the U.S.A.

February 2014 3


Growth of $100,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

$225,000

$250,000

$275,000

$300,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Stock iSharesSuperstars DJ U.S.Portfolio (IYY)

January -5.3% -3.1%2014 YTD -5.3% -3.1%

2013 44.0% 32.6%2012 16.2% 16.1%2011 4.3% 1.1%2010 19.5% 16.4%2009 34.3% 28.5%2008 -43.5% -37.2%2007 5.5% 5.8%2006 3.0% 15.3%2005 -0.3% 6.1%2004 14.3% 11.8%2003 40.2% 30.4%2002 0.5% -22.1%

From Inception 161.6% 108.5%Risk Index (3 Yr) 1.15 1.00

Std. Dev. (3 Yr) 14.4% 12.5%Performance as of 1/29/2014.

Performance

Ris

kR

etur

n

Performance of SSR

The Stock Superstars portfolio started at the beginning of 2002. The SSR portfolio is run as if managed by a subscriber and includes delays in reaction time to SSR alerts, actual commissions and bid-ask spreads.

Skin said it will communicate and cooperate with Chinese regula-tors and conduct its own business review in China. Nu Skin is part of Group 3, which looks for stocks that are attractively valued and have positive earnings surprises and price momentum. Nu Skin’s dramatic price decline has trig-gered the Group 3 relative price strength portfolio deletion alert. A portfolio addition alert was issued for Nu Skin on March 28, 2013. The stock has gained 83.1% since purchase, while the iShares Dow Jones U.S. ETF has gained 15.0% over the same time frame.

February Portfolio AdditionsWe have two portfolio additions

for February: Jazz Pharmaceuti-cals PLC (JAZZ) for Group 1 and American Vanguard Corp. (AVD) for Group 4.

Group 1: Jazz Pharmaceuticals PLC (JAZZ)

Jazz Pharmaceuticals PLC

(JAZZ) passed the Group 1 screen, which looks for companies with a history of strong and consistent annual earnings growth, quarterly earnings momentum, and strong relative price strength.

Jazz Pharmaceuticals is a spe-cialty biopharmaceuticals company headquartered in Ireland that focuses on identifying, develop-ing and commercializing spe-cialty pharmaceutical products to address unmet patient needs. Its primary product, Xyrem (64% of revenue), is used for the treatment of both cataplexy and excessive daytime sleepiness in patients with narcolepsy. Oncology products include Erwanaze, Caphosol, and Prostascint. Its psychiatry prod-ucts are FazaClo LD and FazaClo HD, used for treatment-resistant schizophrenia, and Luvox CR, used for the treatment of obsessive-compulsive disorder. Its pain drug, Prialt, is used to manage severe chronic pain.

Sales at Jazz have expanded

68.9% over the prior year and at an annual rate of 55.1% over the last fi ve years. Earnings, fully diluted from continuing opera-tions, have expanded 122.3% over the prior year and have grown at a 19.5% annual average rate over the last fi ve years. Earnings per share from continuing operations have increased steadily from a defi cit to a positive fi gure over the last fi ve years.

Looking forward, four analysts are providing a long-term earnings growth rate estimate that aver-ages 19.3%, with a range of 10.0% to 26.0%. On November 5, 2013, Jazz’s announced quarterly earn-ings of $1.78 per share, a 6.4% positive earnings surprise. There are 15 analysts providing earnings estimates for Jazz’s current fi scal year, which ended in December 2013. The mean estimate is $6.36 per share ($6.30 to $6.43 per share range) for the current fi scal year and $7.99 ($7.19 to $9.03 range) for the 2014 fi scal year.

4 February 2014


Historically, the company has an-nounced its year-end results in late February. The mean estimate for the 2014 year is up slightly from three months ago.

Over the last 52 weeks, Jazz’s 160% price gain outperformed the S&P 500 by 117% and 94% of all stocks. Over the last 26 weeks, its 100% price increase outperformed the S&P 500 index 89% and 95% of all stocks.

The Group 1 screen does not have any valuation fi lters. Jazz is trading with a price-earnings ratio of 28.6 based on trailing 12-month earnings of $5.29 per share. This price-earnings ratio is in the 72nd percentile of all stocks and above the 27.5 median price-earnings ra-tio for the biotechnology and drugs industry. The company’s forward price-earning ratio is 18.9 times the consensus earnings estimate of $7.99 for 2014 fi scal year. Jazz is being added to the SSR portfolio because of its consistent earnings improvement and strong relative price strength, but its relatively high price valuation makes it a po-tentially higher volatility portfolio addition.

Group 4: American Vanguard Corp. (AVD)

American Vanguard passed the Group 4 screen, which looks for stocks with strong but sustainable historical sales growth, expecta-tions of strong future earnings growth, a low dividend-adjusted PEG ratio (trailing price-earnings ratio divided by the sum of the expected earnings growth rate and the dividend yield), positive free cash fl ow and favorable compari-sons to industry norms.

American Vanguard is a diver-sifi ed specialty and agricultural products company focusing on

crop protection, turf and ornamen-tal markets, and public health ap-plications. The company’s growth strategy is to acquire or license both new and well-established product lines that serve numerous high-valued market niches in mod-ern agriculture. Its products help to improve yields by the use of insecticides, herbicides, fungicides and soil fumigants and to preserve harvested foods.

American Vanguard has a cur-rent price-earnings ratio of 14.8 times trailing earnings of $1.58 per share, which is in the 33th percentile of all stocks. Its forward price-earnings ratio is 20.3 times the consensus earnings estimate of $1.18 for the 2013 fi scal year. The forward price-earnings ratio compares favorably to the expected annual growth rate of 19.0%.

On October 31, 2013, AVD re-ported earnings of $0.31 per share, a 6.9% positive earnings surprise. Currently, for the 2013 fi scal year, fi ve analysts are expecting earnings per share of $1.18 ($1.15 to $1.21 per share range), down $0.17 per share from a month ago and down from $1.64 per share three months ago. On December 20, 2013, AVD announced that elevated channel inventories, arising primarily from prolonged wet weather last spring in the Midwestern United States, will affect its fourth-quarter and full-year 2013 fi nancial perfor-mance. AVD indicated that reve-nues for the fourth quarter of 2013 will be approximately 30% below those of the comparable period in 2012, and that net earnings will be breakeven plus or minus a few cents per share for the quarter. The company expects that demand will pick up strongly next quarter as inventories move through the channel.

Earnings have grown at an aver-age annual rate of 13.5% over the last fi ve fi scal years. Sales have grown by an average of 11.1% a year over the last fi ve years. Look-ing forward, two analysts are pro-viding a three-to-fi ve-year earnings growth rate projection of 19.0%.

AVD has an indicated dividend of $0.20 per share, resulting in a dividend yield of 0.9%. Dividends have expanded at an 11.4% annual growth rate over the last fi ve years. American Vanguard’s market capi-talization is $688 million, placing it in the small-cap range of domes-tic stocks; it is a component of the S&P SmallCap 600 index.

AVD’s ratio of total liabilities to assets is currently at 44.2%, below the 60.0% median for the chemi-cal manufacturing industry and just above its fi ve-year average of 43.1%. While the current ratio of 1.9x is below the fi ve-year aver-age of 2.4x and below the industry median of 2.1x, it is still high.

The Group 4 screening approach looks for stocks trading with a low price-earnings multiple relative to the dividend-adjusted long-term earnings growth rate. AVD’s low forward price-earnings ratio re-fl ects the market’s risk that weath-er places on the success of AVD agricultural products. American Vanguard must continue to offer the right mix of products, form the right relationships with other fi rms such as Monsanto, and expand sales internationally to succeed go-ing forward.

SSR PortfolioSince inception, the SSR port-

folio has gained 161.6%, while the iShares Dow Jones U.S. ETF (IYY) is up 108.5%. For 2014 year-to-date, the IYY is down 3.1%, while the SSR portfolio has lost 5.3%. •

February 2014 5


Recent Earnings AnnouncementsDate Reported Expected Surprise

%sgninraEsgninraEdetropeR)rekciT( kcotSGroup 1

%7.5138.0$69.0$03 naJ)NET( .cnI ,ocenneTGroup 2Alaska Air Group, Inc. (ALK) Jan 23 $1.10 $1.07 2.8%

%8.0-62.1$52.1$61 naJ)PXA( sserpxE naciremAHelmerich & Payne. Inc. (HP) Jan 30 $1.59 $1.46 8.9%Microsoft Corporation (MSFT) Jan 23 $0.78 $0.68 14.7%Murphy Oil Corporation (MUR) Jan 29 $0.96 $1.22 -21.3%

%7.725.0$65.0$82 naJ)EFP( .cnI rezifPUnitedHealth Group (UNH) Jan 16 $1.41 $1.40 0.7%

%3.157.0$67.0$22 naJ)BSU( procnaB .S.U%0.092.0$92.0$42 naJ)XRX( .proC xoreX

Group 3%5.3173.0$24.0$92 naJ)KETT( .cnI hceT arteT

Tractor Supply Co. (TSCO) Jan 29 $0.68 $0.65 4.6%Group 4

%3.0282.1$45.1$72 naJ)TAC( .cnI rallipretaCHelen of Troy Limited (HELE) Jan 8 $1.16 $1.09 6.4%Micron Technology, Inc. (MU) Jan 7 $0.77 $0.43 79.1%

%8.681.1$62.1$92 naJ)MOCQ( .cnI ,mmoclauQWESCO International, Inc. (WCC) Jan 30 $1.26 $1.32 -4.5%

Gilead Sciences, Inc. (GILD)(01/17/2014) Gilead announced that the European

Commission has granted marketing authorization for Sovaldi 400 mg tablets, a once-daily treatment of chronic hepatitis C infection in adults. This des-ignation is granted to new medicines of major pub-lic health interest, and allows for the marketing of Sovaldi in all 28 countries of the European Union. Helen of Troy Limited (HELE)

(01/15/2014) Helen of Troy Limited announced that CEO and president Gerald Rubin is leaving the company and resigning from the board immediately. Julien Mininberg, who currently presides over the healthcare and home environment segment, will now serve as the company’s president. Helmerich & Payne, Inc. (HP)

(01/08/2014) RBC Capital Markets upgraded Helmerich & Payne from sector perform to outperform and raised their target price from $84 to $96 based on the company’s dominant market position in the growing Tier 1 rig market. The article on Briefi ng.com noted, “If the spot market rigs were to close the pricing gap with the contracted fl eet during 2014, they believe this could add an additional $0.20 to $0.25 per share to their full-year 2013 earnings estimate.”Micron Technology, Inc. (MU)

(01/08/2014) Several analysts commented on Micron Technol-ogy following their quarterly results. Needham raised its tar-get price on Micron from $30 to $34. The fi rm expects that Micron will see further earnings accretion from Elpida and also remains well positioned into 2014 as NAND (fl ash memory) and demand dynamics look to remain favorable. Analysts at Stifel Nicolaus noted that they were impressed with the num-ber of operational improvement initiatives that Micron’s man-agement is driving. They believe Micron is transitioning into a phase of longer-term profi tabil-

ity as the industry matures. Microsoft Corporation (MSFT)

(01/23/2014) FBR Capital noted that Microsoft delivered a solid quarter, primarily due to strength in the cloud. Surface and Xbox provided support for the quarter due to a new product cycle for both. RBC Capital mentioned that the company’s third-quarter earnings guidance was lower than expected, possibly due to conservatism with an improving economy. No comment was made regarding the search for a new CEO, which may worry investors in the near term. Perrigo Company (PRGO)

(01/07/2014) Coverage of Perrigo was initiated at RBC Capital Markets with a top pick rating and a target price of $187 per share. They see a multi-year earnings per share upside opportunity based on a strong over-the-counter drug pipeline. RBC also feels that Perrigo will likely pursue merger and acquisition initiatives because of their new low tax platform. Per-rigo’s addition of Tysabri should be upside potential as well. •

SSR Stocks in the News

6 February 2014


February 2014 7


Rel Strength Since Purchase – Price performance of a stock compared to the iShares Dow Jones U.S. ETF (IYY) since the stock was purchased for the SSR portfolio.Rel Strength % Rank – An indication of how a stock has performed relative to all U.S.-listed stocks over the stated time period. A rank of 75% refl ects performance that surpassed 75% of all stocks over the period—or that places the stock within the top 25% of the universe.Risk Index – The 36-month annualized standard deviation of return for the stock divided by the 36-month annualized standard deviation of return for the Wilshire

5000 index. The baseline value for the index is 1.00. Values above 1.00 indicate greater risk than the index. Values below 1.00 indicate less risk than the index. P/E Ratio (TTM) – The current stock price divided by diluted earnings per share from continuing operations for the trailing 12 months.EPS (TTM) – The amount of fully diluted earnings from continuing operations reported by a company for the most recent 12-month period (TTM) on a per share basis.EPS (Est Current Year) – The average consensus earnings estimate for the current fi scal year.

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chase Price One Pur- Since Index Ratio EPS Current Hist Est Hist Sales Value Div Cap VolumeCompany (Exchange: Ticker) Date Price Price (1/28/14) Month chase Purchase 4 Wk 52 Wk (3 Yr) (TTM) (TTM) Year) EPS EPS Sales Ratio Ratio Yield (Mil) (Mil) DescriptionGroup 1: Profitability & Relative StrengthJazz Pharmaceuticals PLC (JAZZ) 1/31/14 na na $151.44 19.7% na na 89% 94% 2.96 28.6 $5.29 $6.36 19.5% 19.3% 55.1% 10.75 7.1 0.0% $8,622 $106.2 biopharmaceuticals for narcolepsy, schizophrenia, OCDDomino's Pizza, Inc. (DPZ) 12/6/13 $69.78 $69.21 $69.86 0.3% 0.9% 1.00 60% 80% 2.23 29.9 $2.34 $2.44 26.5% 14.1% 2.8% 2.17 nmf 1.1% $3,966 $32.8 pizza delivery companyTenneco Inc. (TEN) 6/28/13 $45.28 $46.53 $54.05 -4.5% 16.2% 1.04 29% 77% 2.87 20.6 $2.63 $3.63 112.1% 19.5% 3.6% 0.43 8.6 0.0% $3,271 $25.4 vehicle emission and ride control products and systemsDollar General Corp. (DG) 3/30/12 $46.20 $46.78 $57.27 -5.1% 22.4% 0.95 29% 62% 1.57 18.3 $3.13 $3.22 136.0% 15.2% 11.0% 1.07 3.5 0.0% $18,367 $165.4 discount retailer of consumables, apparel & home prodsNewMarket Corp. (NEU) 10/28/11 $198.16 $197.49 $313.24 -6.3% 58.6% 1.10 33% 53% 2.34 17.3 $18.08 $17.56 31.0% 5.7% 10.1% 1.86 7.7 1.4% $4,269 $11.9 manufactures & blends petroleum additivesGilead Sciences, Inc. (GILD) 9/30/11 $19.40 $19.24 $80.67 7.4% 319.4% 2.64 78% 91% 1.93 52.0 $1.55 $2.00 14.9% 36.0% 18.1% 11.58 11.4 0.0% $123,619 $687.4 biopharmaceuticals for life-threatening diseasesPerrigo Company (PRGO) 8/27/10 $58.13 $58.19 $157.05 2.3% 169.9% 1.56 56% 79% 1.59 33.2 $4.73 $6.62 26.2% 15.0% 15.4% 3.99 6.0 0.2% $20,432 $178.7 mfrs generic & store-brand OTC drugs & infant formulasMWI Veterinary Supply (MWIV) 6/25/10 $48.99 $50.13 $182.65 7.5% 264.4% 2.06 66% 81% 2.31 36.9 $4.95 $5.62 25.0% 15.0% 23.1% 0.99 5.4 0.0% $2,306 $9.3 distributes animal health care products to vetsGroup 2: Value & Financial StrengthAlaska Air Group, Inc. (ALK) 12/6/13 $73.51 $72.75 $79.53 8.4% 9.3% 1.08 81% 86% 2.30 11.1 $7.18 $6.39 42.3% 12.2% 7.1% 1.07 2.7 1.0% $5,539 $53.6 commercial airline: Alaska Airlines & Horizon AirMurphy Oil Corporation (MUR) 8/30/13 $58.22 $60.98 $61.17 -5.7% 0.3% 0.93 24% 31% 2.41 12.2 $5.01 $5.49 5.0% 9.2% 9.3% 0.47 1.3 2.0% $11,313 $81.6 oil & gas exploration & productionHelmerich & Payne, Inc. (HP) 3/28/13 $60.70 $59.61 $86.36 2.7% 44.9% 1.25 64% 74% 2.74 13.0 $6.65 $5.81 11.1% 7.5% 12.6% 2.72 2.1 2.9% $9,277 $83.9 engages in contract drilling of oil and gas wellsXerox Corp. (XRX) 11/30/12 $6.81 $7.03 $10.88 -10.6% 54.8% 1.21 18% 77% 2.13 11.7 $0.93 $1.09 29.6% 4.2% 4.0% 0.62 1.1 2.3% $13,838 $115.7 business process & IT outsourcing; document techUnitedHealth Group (UNH) 8/31/12 $54.30 $54.29 $71.71 -4.8% 32.1% 1.03 31% 65% 1.36 13.0 $5.50 $5.60 18.0% 8.2% 8.6% 0.59 2.3 1.6% $72,084 $313.8 diversified healthcare and well-being companyU.S. Bancorp (USB) 4/27/12 $32.29 $32.18 $40.54 0.3% 26.0% 0.98 46% 60% 1.03 13.5 $3.00 $3.18 13.3% 6.3% -0.2% 6.01 2.0 2.3% $73,308 $286.8 multi-state financial services holding companyAmerican Express (AXP) 2/3/12 $52.25 $51.94 $86.64 -4.3% 66.8% 1.24 38% 78% 1.40 17.8 $4.88 $5.45 14.6% 11.5% 1.8% 2.65 4.9 1.1% $92,515 $306.8 credit payment products for consumer and businessMicrosoft Corporation (MSFT) 9/30/11 $24.89 $26.21 $36.27 -3.0% 38.4% 0.89 43% 70% 1.55 13.4 $2.71 $2.66 6.6% 7.2% 5.2% 3.62 3.5 3.1% $307,247 $1,551.0 Windows, business & consumer software & hardwareChevron Corporation (CVX) 4/1/11 $108.32 $108.05 $116.84 -6.5% 8.1% 0.80 20% 41% 1.31 9.6 $12.22 $11.23 8.7% 4.7% 1.2% 0.98 1.5 3.4% $223,646 $619.7 produces oil and natural gas, refines crude into petroStepan Company (SCL) 10/29/10 $33.72 $33.70 $63.56 -3.2% 88.6% 1.23 31% 51% 1.61 18.7 $3.39 $3.62 36.0% na 6.3% 0.79 2.7 1.1% $1,425 $2.8 specialty & intermediate chemicals for range of indus

10,591$%4.36.277.3%0.4%4.2%3.181.2$54.1$0.1291.1%25%14 90.1%4.811%7.0-24.03$39.31$85.31$90/1/5)EFP( .cnI rezifP 5 $704.8 global pharmaceutical companyGroup 3: GARP RevisionsTetra Tech, Inc. (TTEK) 1/3/14 $27.63 $28.32 $28.75 2.8% 1.5% 1.03 70% 42% 1.82 nmf -$0.04 $1.75 -15.2% 13.0% 10.2% 0.91 1.9 0.0% $1,900 $10.2 natural resource, infrastructure, energy & environm't servsOmnicell, Inc. (OMCL) 8/30/13 $21.74 $24.00 $25.63 0.4% 6.8% 0.99 56% 84% 1.91 40.0 $0.64 $1.07 -18.2% 15.5% 8.1% 2.47 2.5 0.0% $910 $5.7 automated solutions for hospital medication managementNational Oilwell Varco (NOV) 12/2/11 $71.05 $71.59 $73.31 -7.8% 2.4% 0.70 21% 40% 2.81 13.4 $5.46 $5.36 9.2% 9.6% 15.4% 1.40 1.4 1.4% $31,679 $197.5 equipment & servs for oil/gas drilling & productionTractor Supply Co. (TSCO) 2/26/10 $13.68 $14.24 $70.68 -8.9% 396.5% 3.06 20% 79% 1.79 32.3 $2.19 $2.29 25.1% 18.1% 11.5% 1.96 8.3 0.7% $9,796 $78.2 operates retail farm and ranch storesBecton, Dickinson & Co. (BDX) 3/6/09 $64.15 $63.78 $108.21 -2.1% 69.7% 0.62 39% 66% 1.19 23.2 $4.67 $6.23 1.8% 8.9% 3.1% 2.62 4.2 2.0% $20,901 $75.5 sells medical diagnostic supplies, devices & lab equipGroup 4: Reasonably Priced GrowthAmerican Vanguard Corp. (AVD) 1/31/14 na na $23.41 -3.6% na na 47% 17% 3.30 14.8 $1.58 $1.18 13.5% 19.0% 11.1% 1.62 2.6 0.9% $688 $4.5 chemical mfr for agricultural & commerical usesMicron Technology, Inc. (MU) 11/1/13 $17.58 $17.61 $23.05 6.0% 30.9% 1.29 75% 96% 3.57 15.2 $1.52 $2.14 20.4% 5.5% 9.2% 2.14 2.6 0.0% $24,315 $910.3 manufactures semiconductor devices, flash memory Qualcomm, Inc. (QCOM) 5/31/13 $63.48 $63.39 $71.99 -3.0% 13.6% 1.03 55% 55% 1.49 18.4 $3.91 $5.08 15.5% na 17.4% 4.92 3.4 1.9% $125,033 $682.1 semiconductors; wireless telecommunications products Helen of Troy Limited (HELE) 3/1/13 $36.56 $36.27 $56.62 14.7% 56.1% 1.34 85% 81% 1.97 17.1 $3.31 $3.56 13.4% na 14.6% 1.36 1.8 0.0% $1,810 $7.3 consumer prods: Dr. Scholl's, Revlon, Sunbeam & OXO

i 1.572$405,55$%2.29.028.0%8.7%4.8%5.62-65.5$91.2$7.2245.2%17%71 41.1%1.44%0.8-36.94$54.43$64.43$21/82/9)TEM( .cnI efiLteM nsurance, annuities & employee benefit programsCaterpillar Inc. (CAT) 6/29/12 $84.91 $84.06 $92.47 2.5% 10.0% 0.83 27% 25% 2.32 17.6 $5.25 $5.49 9.6% -0.3% 7.9% 1.03 3.3 2.6% $54,835 $445.8 mfrs construction & mining equip & enginesFlowserve Corporation (FLS) 3/30/12 $38.50 $38.45 $74.02 -6.1% 92.5% 1.49 27% 75% 2.32 22.2 $3.33 $3.46 13.9% 14.3% 4.8% 2.12 5.8 0.8% $10,180 $75.2 manufacturer and servicer of flow control systems

oitcua 4.35$823,3$%8.02.351.4%5.3-%0.81%2.31-79.1$25.1$2.2342.3%17%02 70.1%4.05%1.8-88.84$05.23$30.92$21/6/1)DIB( s'ybehtoS neers of authenticated art, jewelry & collectiblesReinsurance Grp of America (RGA) 6/24/11 $59.90 $60.75 $73.51 -5.0% 21.0% 0.88 28% 69% 1.62 10.9 $6.74 $4.75 12.2% 6.9% 11.5% 0.51 0.9 1.6% $5,166 $24.8 life & disability, annuity and financial reinsuranceAmerisafe, Inc. (AMSF) 2/26/10 $17.21 $17.03 $41.97 -0.6% 146.5% 1.52 46% 78% 2.00 22.2 $1.89 $2.02 -8.5% na -1.0% 2.22 1.9 0.8% $778 $2.4 underwrites workers' compensation insuranceWESCO International, Inc. (WCC) 2/6/09 $21.75 $21.79 $85.86 -5.7% 294.1% 1.85 38% 60% 2.93 16.3 $5.27 $5.12 -3.9% 12.0% 1.8% 0.52 2.2 0.0% $3,914 $41.3 electrical construction products & maintenance suppliesMontpelier Re Holdings Ltd. (MRH) 3/28/08 $15.87 $16.62 $27.80 -4.5% 67.2% 1.23 30% 53% 1.34 16.5 $1.68 $4.45 2.2% 6.9% 0.9% 2.34 1.0 1.7% $1,368 $7.0 underwrites property and casualty insuranceData as of 1/28/2014. Source: AAII Stock Investor Pro, Thomson Reuters and I/B/E/S.

Gain/Loss

Portfolio AlertetaR htworGhtgnertS leR

% Rank

Growth Rate—Hist EPS – The compound annual percentage change in fully diluted earnings per share from continuing operations over the last fi ve fi scal years.Growth Rate—Est EPS – The average of analysts’ expected long-term (three- to fi ve-year) growth rate in earnings per share.Growth Rate—Hist Sales – The compound annual percentage change in total sales over the last fi ve fi scal years.Price-to-Sales Ratio – The current stock price divided by the sales per share for the trailing 12 months (last four fi scal quarters).

Price-to-Book-Value Ratio – The current stock price divided by book value per share for the latest reported fi scal quarter. Book value per share is equal to total assets less total liabilities and preferred stock, divided by common shares outstanding.Div Yield – The indicated dividend (last quarterly per share dividend multiplied by four) divided by the current stock price. Market Cap (Mil) – The current stock price multiplied by the average number of common shares outstanding during the last fi scal quarter.Avg Daily Dollar Volume (Mil) – The current stock price multiplied by the average daily trading volume over the last six months.

8 February 2014


SSR Group 1: Jazz Pharmaceuticals PLC (JAZZ) $151.44 ($159.14 - $50.76)

Group 1: Profitability & Relative StrengthAddition Alert Date: 1/31/2014Price at Alert: Closing Price on 1/31/2014Primary Industry: Biotechnology & Drugs3 Yr Risk Index: 2.95Market Cap: $8,622 MilAvg Daily Dollar Volume: $106.2 Mil

Multiples Current 12/2012 12/2011 12/2010 12/2009 12/2008Price/Earnings 28.6 20.7 18.3 40.2 nmf nmfPrice/Book Value 7.1 4.5 10.5 39.7 nmf nmf

4.21.30.75.77.87.01selaS/ecirPPrice/Cash Flow 23.2 17.7 61.2 45.1 nmf nmfPrice/Free Cash Flow 31.9 NA 15.7 24.4 nmf nmf

0.00.00.00.00.00.0)%( dleiY8002/219002/210102/211102/212102/21tnerruCsoitaR

Gross Margin (%) 87.5 86.6 94.9 92.2 92.5 79.4Operating Margin (%) 38.7 33.8 46.5 26.2 12.4 (252.4)Net Margin (%) 44.1 49.2 45.9 18.9 (5.3) (273.0)

N9.8)5.551(9.1119.348.03)%( EOR A)4.311()0.6(0.722.460.625.71)%( AOR

3.06.02.18.39.20.4oitaR tnerruCPayout Ratio (%) 0.0 0.0 0.0 0.0 NA 0.0Liabilities to Assets (%) 43.1 43.0 24.0 77.5 167.8 168.4Asset Turnover 0.4 0.5 1.4 1.4 1.1 0.4Financial Statements TTM 12/2012 12/2011 12/2010 12/2009 12/2008

5.764.8218.3713.2720.6854.028)M$( selaSStock Rel Strgth Rel Strgth Gross Income ($M) 718.1 507.6 258.4 160.2 118.8 53.6Gain Index Rank Depreciation ($M) -- -- -- -- -- --

4 Week 21% 1.24 89% Unusual/Extra ($M) 4.7 0.0 1.2 12.3 0.0 29.813 Week 61% 1.58 94% Operating Income ($M) 317.8 197.9 126.6 45.5 15.9 (170.4)26 Week 100% 1.89 95% Interest Expense ($M) 13.3 0.0 1.7 12.7 22.8 19.752 Week 160% 2.17 94% Pretax Income ($M) 278.0 177.4 125.0 32.8 (6.8) (184.3)

Net Income ($M) 361.5 288.5 125.0 32.8 (6.8) (184.3)Growth TTM 3 Year 5 Year Operating Cash Flow ($M) 308.7 249.8 151.6 58.9 (15.9) (130.2)

Sales 68.9% 65.9% 55.1% Investing Cash Flow ($M) 79.0 (395.3) (81.2) (2.1) (6.1) (11.9)Net Income 188.3% 254.2% 32.5% Financing Cash Flow ($M) 8.5 448.5 (33.1) (27.5) 12.7 64.1EPS Basic 150.2% 189.0% 20.2% Net Cash Flow ($M) 398.7 305.1 37.3 29.2 (9.3) (78.0)EPS Dil Cont 122.3% 175.3% 19.5% EPS Basic ($) 6.13 5.09 3.01 0.90 (0.23) (7.19)Dividends -- -- -- EPS Diluted Cont ($) 5.29 4.34 2.67 0.83 (0.23) (7.19)

Dividends/Share ($) 0.00 0.00 0.00 0.00 0.00 0.00Est Surprise EP % Surp SUE Score Free Cash Flow/Share ($) 4.75 (5.24) 3.12 1.37 (0.73) (6.20)

9.526.518.449.7512.7835.885)M$( hsaC08.1%4.687.1$3102/5/11Quarterly Annual Annual Goodwill/Intangibles ($M) 1,270.5 1,312.6 52.8 60.2 68.1 70.7

EPS Estimates 12/2013 12/2013 12/2014 Total Assets ($M) 2,185.5 1,966.5 253.6 135.7 107.4 117.5# of Estimates 15 15 15 Long-Term Debt ($M) 545.6 427.1 0.0 24.6 91.1 0.0Current $1.78 $6.36 $7.99 Total Liabilities ($M) 941.8 845.2 60.8 105.2 180.2 197.9Month Ago $1.78 $6.37 $8.00 Book Value/Share ($) 21.36 19.80 4.65 0.84 (2.43) (3.13)Three Mos. Ago $1.79 $6.37 $7.95 Avg Shares Outst'g (M) 58.2 56.6 41.5 36.3 30.0 25.6Sources: AAII Stock Investor Pro, Thomson Reuters and I/B/E/S. Data as of 1/28/2014.

Jazz Pharmaceuticals is a specialty biopharmaceutical company. The company's marketed products include Xyrem,which is a product approved by the United States Food and Drug Administration for the treatment of both cataplexy and excessive daytime sleepiness in patients with narcolepsy. Its psychiatry products are FazaClo LD and FazaClo HD, which are orally disintegrating clozapine tablets indicated for treatment-resistant schizophrenia; Luvox CR, used for the treatment of obsessive-compulsive disorder; and Prialt, used for refractory severe chronic pain. In June 2012, it acquired EUSA Pharma. In October 2012, it sold its women's health business to Meda.

JAZZ passed the Group 1 screen, which looks for companies with a proven record of earnings growth that are showing strong relative price strength. JAZZ has a current P/E of 28.6 based on trailing 12-month EPS of $5.29. The consensus EPS estimate for fiscal-year 2013 is $6.36 and $7.99 for fiscal-year 2014. The latest quarterly EPS was $1.78 per share, which exceeded analyst estimates by 6.4% and was 40.0% higher than a year ago. The consensus long-term estimated EPS growth rate is 19.3%. Earnings have grown at an annual rate of 19.5% over the last five years. Revenues have grown at an annualized rate of 55.1% over the same period. JAZZ shares have outpaced the S&P 500 by 117% over the last 52 weeks and have outperformed 94% of all U.S. stocks over the same period.

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February 2014 9


SSR Group 2: American Express (AXP) $86.64 ($93.62 - $58.70)

Group 2: Value & Financial StrengthAddition Alert Date: 2/3/2012Price at Alert: $52.25Primary Industry: Regional Banks3 Yr Risk Index: 1.40Market Cap: $92,515 MilAvg Daily Dollar Volume: $306.8 Mil

Multiples Current 12/2013 12/2012 12/2011 12/2010 12/2009Price/Earnings 17.8 15.3 14.0 11.6 12.8 16.9Price/Book Value 4.9 4.3 3.3 3.0 3.1 2.1

1.17.17.18.13.26.2selaS/ecirPPrice/Cash Flow nmf nmf 7.3 nmf nmf 6.2Price/Free Cash Flow 36.0 15.8 8.0 8.1 11.1 5.1


Gross Margin (%) -- 94.4 93.4 92.8 91.9 91.7Operating Margin (%) 26.7 22.6 19.1 21.5 19.9 10.7Net Margin (%) 15.2 15.2 13.1 15.1 13.4 6.8

7.312.628.725.320.828.72)%( EOR4.19.23.39.25.35.3)%( AOR

------------oitaR tnerruCPayout Ratio (%) 18.1 17.5 20.5 17.4 21.4 46.8Liabilities to Assets (%) 87.6 87.6 87.7 87.7 88.9 88.5Asset Turnover 0.2 0.2 0.2 0.2 0.2 0.2Financial Statements TTM 12/2013 12/2012 12/2011 12/2010 12/2009Sales ($M) 34,932.0 34,932.0 33,808.0 32,282.0 30,005.0 26,543.0

Stock Rel Strgth Rel Strgth Gross Income ($M) -- 32,974.0 31,582.0 29,962.0 27,582.0 24,336.0Gain Index Rank Depreciation ($M) -- -- -- -- -- --

4 Week (3%) 1.00 38% Unusual/Extra ($M) 0.0 0.0 0.0 (562.0) (852.0) (852.0)13 Week 5% 1.04 64% Operating Income ($M) 9,342.0 7,888.0 6,451.0 6,956.0 5,964.0 2,841.026 Week 15% 1.09 69% Interest Expense ($M) -- -- -- -- -- --52 Week 47% 1.22 78% Pretax Income ($M) 7,888.0 7,888.0 6,451.0 6,956.0 5,964.0 2,841.0

Net Income ($M) 5,312.0 5,312.0 4,433.0 4,877.0 4,006.0 1,802.0Growth TTM 3 Year 5 Year Operating Cash Flow ($M) -- 7,082.0 9,768.0 8,729.0 6,337.0 7,773.0

Sales 3.4% 5.2% 1.8% Investing Cash Flow ($M) -- (6,545.0) (491.0) (1,229.0) (6,752.0) 7,561.0Net Income 19.8% 9.9% 14.6% Financing Cash Flow ($M) -- (3,268.0) (677.0) (7,878.0) (4,647.0) (10,440.0)EPS Basic 25.9% 13.4% 16.1% Net Cash Flow ($M) -- (2,643.0) 8,537.0 (243.0) (5,055.0) 4,914.0EPS Dil Cont 26.1% 13.4% 14.6% EPS Basic ($) 4.91 4.91 3.91 4.14 3.37 1.54Dividends 11.3% 6.1% 3.6% EPS Diluted Cont ($) 4.88 4.88 3.89 4.09 3.35 1.54

Dividends/Share ($) 0.89 0.86 0.80 0.72 0.72 0.72Est Surprise EPS % Surp SUE Score Free Cash Flow/Share ($) 2.41 4.71 6.76 5.90 3.88 5.091/16/2014 $1.25 (0.5%) (0.20) Cash ($M) 19,000.0 19,000.0 2,020.0 3,514.0 2,145.0 1,525.0

Quarterly Annual Annual Goodwill/Intangibles ($M) 0.0 0.0 4,174.0 4,321.0 3,611.0 3,045.0EPS Estimates 3/2014 12/2014 12/2015 Total Assets ($M) 153,000.0 153,000.0 153,140.0 153,337.0 146,689.0 125,145.0# of Estimates 24 27 27 Long-Term Debt ($M) 55,000.0 55,000.0 58,973.0 59,570.0 66,416.0 52,338.0Current $1.29 $5.45 $6.04 Total Liabilities ($M) 134,000.0 134,000.0 134,254.0 134,543.0 130,459.0 110,739.0Month Ago $1.29 $5.42 $6.03 Book Value/Share ($) 17.81 17.56 16.64 15.95 13.66 12.33Three Mos. Ago $1.29 $5.40 $5.97 Avg Shares Outst'g (M) 1,067.0 1,082.0 1,135.0 1,178.0 1,188.0 1,168.0Sources: AAII Stock Investor Pro, Thomson Reuters and I/B/E/S. Data as of 1/28/2014.

American Express is a global service company. The company's products and services include charge and credit card products, expense management products and services, consumer and business travel services, stored value products, such as travelers cheques and other prepaid products, fee services, including market and trend analyses and related consulting services, fraud prevention services, and the design of customized customer loyalty and rewards programs. It operates in four segments: U.S. card services, international card services, global commercial services and global network & merchant services. American Express and its operating subsidiary, American Express Travel Related Services Company, are bank holding companies.

Recent News: On January 7, 2014, American Express was upgraded from neutral to buy at Buckingham Research. The company was also upgraded from neutral to positive at Susquehanna, and the target price was raised from $90 to $107.

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10 February 2014


SSR Group 3: National Oilwell Varco (NOV) $73.31 ($84.71 - $63.08)

Group 3: GARP RevisionsAddition Alert Date: 12/2/11Price at Alert: $71.05Primary Industry: Oil Well Services & Equipment3 Yr Risk Index: 2.80Market Cap: $31,679 MilAvg Daily Dollar Volume: $197.5 Mil

Multiples Current 12/2012 12/2011 12/2010 12/2009 12/2008Price/Earnings 13.4 12.7 15.9 16.9 14.2 7.4Price/Book Value 1.4 1.6 1.8 1.8 1.5 1.1

1.16.13.22.26.14.1selaS/ecirPPrice/Cash Flow 30.5 nmf 155.2 39.6 19.3 nmfPrice/Free Cash Flow 18.9 nmf 21.5 24.8 15.0 7.5

fmn2.06.06.07.04.1)%( dleiY8002/219002/210102/211102/212102/21tnerruCsoitaR

Gross Margin (%) 23.7 26.6 30.7 31.5 29.8 30.3Operating Margin (%) 15.1 17.7 20.0 20.1 18.2 21.7Net Margin (%) 10.4 12.4 13.6 13.7 11.6 14.5

2.020.112.110.212.312.11)%( EOR6.118.65.72.87.80.7)%( AOR

Current Ratio (%) 2.6 2.8 2.2 2.3 2.1 1.7Payout Ratio (%) 14.2 8.4 9.5 10.3 2.8 0.0Liabilities to Assets (%) 37.6 35.7 30.9 31.7 34.5 41.2Asset Turnover 0.7 0.7 0.6 0.5 0.6 0.8Financial Statements TTM 12/2012 12/2011 12/2010 12/2009 12/2008Sales ($M) 22,382.0 20,041.0 14,658.0 12,156.0 12,712.0 13,431.4

Stock Rel Strgth Rel Strgth Gross Income ($M) 5,295.0 5,339.0 4,497.0 3,832.0 3,784.0 4,071.5Gain Index Rank Depreciation ($M) -- -- -- -- -- --

4 Week (7%) 0.96 21% Unusual/Extra ($M) 0.0 0.0 0.0 0.0 147.0 0.013 Week (11%) 0.88 24% Operating Income ($M) 3,369.0 3,557.0 2,937.0 2,447.0 2,315.0 2,917.526 Week 3% 0.98 50% Interest Expense ($M) 105.0 49.0 40.0 50.0 53.0 67.352 Week 0% 0.84 40% Pretax Income ($M) 3,284.0 3,505.0 2,922.0 2,397.0 2,208.0 2,961.3

Net Income ($M) 2,337.0 2,491.0 1,994.0 1,667.0 1,469.0 1,952.0Growth TTM 3 Year 5 Year Operating Cash Flow ($M) -- 620.0 2,143.0 1,542.0 2,095.0 2,294.0

Sales 20.2% 16.4% 15.4% Investing Cash Flow ($M) -- (3,428.0) (1,458.0) (743.0) (552.0) (2,473.0)Net Income (22.2%) 19.2% 13.3% Financing Cash Flow ($M) -- 2,583.0 (464.0) (102.0) (491.0) (74.0)EPS Basic (22.6%) 18.4% 9.2% Net Cash Flow ($M) -- (216.0) 202.0 711.0 1,079.0 (299.0)EPS Dil Cont (2.8%) 18.3% 9.2% EPS Basic ($) 5.48 5.86 4.73 4.00 3.53 4.91Dividends 30.0% 69.8% -- EPS Diluted Cont ($) 5.46 5.83 4.70 3.98 3.52 4.90

Dividends/Share ($) 0.78 0.49 0.45 0.41 0.10 0.00Est Surprise EPS % Surp SUE Score Free Cash Flow/Share ($) 3.88 (0.40) 3.46 2.72 3.32 4.8010/25/2013 $1.34 1.9% 0.80 Cash ($M) 2,741.0 3,319.0 3,535.0 3,333.0 2,622.0 1,542.8

Quarterly Annual Annual Goodwill/Intangibles ($M) 14,216.0 11,915.0 10,224.0 9,893.0 9,541.0 9,525.3EPS Estimates 12/2013 12/2013 12/2014 Total Assets ($M) 34,673.0 31,484.0 25,515.0 23,050.0 21,532.0 21,478.7# of Estimates 30 31 33 Long-Term Debt ($M) 3,749.0 3,148.0 159.0 514.0 876.0 869.6Current $1.39 $5.36 $6.19 Total Liabilities ($M) 13,046.0 11,245.0 7,896.0 7,302.0 7,419.0 8,851.1Month Ago $1.40 $5.36 $6.25 Book Value/Share ($) 50.77 47.62 41.75 37.76 33.93 31.78Three Mos. Ago $1.40 $5.36 $6.29 Avg Shares Outst'g (M) 426.0 425.0 422.0 417.0 416.0 397.3Sources: AAII Stock Investor Pro, Thomson Reuters and I/B/E/S. Data as of 01/28/2014.

National Oilwell Varco is a provider of equipment and components used in oil and gas drilling and production operations, oilfield services, and supply chain integration services to the upstream oil and gas industry. The company operates through three segments. Its rig technology segment designs, manufactures, sells and services complete systems for the drilling, completion, and servicing of oil and gas wells. Its petroleum services & supplies segment provides a variety of consumable goods and services used to drill, complete, remediate and workover oil and gas wells and service drill pipe, tubing, casing, flowlines and other oilfield tubular goods. Its distribution & transmission segment provides maintenance, repair and operating supplies and spare parts to drill site and production locations worldwide.

Recent News: On January 8, 2014, RBC Capital Markets downgraded National Oilwell Varco from outperform to sector perform and set a target price of $86. They believe National Oilwell shares are range-bound in the near term dueto offshore drilling headwinds that will limit rig technology orders.

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Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014

February 2014 11


SSR Group 4: American Vanguard Corp. (AVD) $23.41 ($34.97 - $21.83)

Group 4: Reasonably Priced GrowthAddition Alert Date: 1/31/2014Price at Alert: Closing Price on 1/31/2014Primary Industry: Chemical Manufacturing3 Yr Risk Index: 3.29Market Cap: $688 MilAvg Daily Dollar Volume: $4.5 Mil

Multiples Current 12/2012 12/2011 12/2010 12/2009 12/2008Price/Earnings 14.8 22.2 32.0 28.0 nmf 15.6Price/Book Value 2.6 3.5 3.7 1.8 1.4 2.0

3.10.14.13.22.26.1selaS/ecirPPrice/Cash Flow nmf 236.7 20.7 373.3 nmf nmfPrice/Free Cash Flow 83.6 61.7 23.2 nmf 8.1 nmf


Gross Margin (%) 45.2 44.0 40.9 38.1 27.6 42.6Operating Margin (%) 17.5 16.2 12.9 8.5 (3.1) 15.2Net Margin (%) 11.1 10.0 7.3 4.8 (2.8) 8.4

5.31)8.3(9.65.219.716.81)%( EOR5.7)1.2(1.41.79.92.01)%( AOR

Current Ratio (%) 1.9 2.0 2.3 2.4 2.3 3.0Payout Ratio (%) 14.9 9.1 10.0 7.5 nmf 10.7Liabilities to Assets (%) 44.2 43.7 45.4 40.6 40.0 45.7Asset Turnover 0.9 1.0 1.0 0.8 0.8 0.9Financial Statements TTM 12/2012 12/2011 12/2010 12/2009 12/2008

5.7328.5029.6221.1032.6638.804)M$( selaSStock Rel Strgth Rel Strgth Gross Income ($M) 184.7 161.1 123.1 86.4 56.9 101.1Gain Index Rank Depreciation ($M) 0.0 1.0 2.0 3.0 4.0 5.0

4 Week (0%) 1.02 47% Unusual/Extra ($M) 0.0 0.0 0.5 0.0 0.0 0.013 Week (12%) 0.86 21% Operating Income ($M) 71.7 59.3 38.7 19.2 (6.3) 36.126 Week (3%) 0.92 37% Interest Expense ($M) 408.8 366.2 301.1 226.9 205.8 237.552 Week (30%) 0.59 17% Pretax Income ($M) 69.6 56.9 35.2 16.2 (9.5) 32.2

Net Income ($M) 45.4 36.8 22.1 11.0 (5.8) 20.0Growth TTM 3 Year 5 Year Operating Cash Flow ($M) 34.6 40.4 39.3 33.2 32.0 0.9

Sales 19.1% 21.2% 11.1% Investing Cash Flow ($M) (22.2) (21.1) (6.6) (40.7) (4.3) (24.9)Net Income 42.3% 102.8% 14.5% Financing Cash Flow ($M) (23.6) (16.4) 2.3 8.1 (28.6) 23.2EPS Basic 40.0% 102.4% 13.2% Net Cash Flow ($M) (11.3) 3.4 33.9 0.8 (0.8) (2.0)EPS Dil Cont 41.1% 100.8% 13.5% EPS Basic ($) 1.61 1.32 0.80 0.40 (0.21) 0.75Dividends 9.1% 26.0% 11.4% EPS Diluted Cont ($) 1.58 1.28 0.79 0.40 (0.21) 0.73

Dividends/Share ($) 0.24 0.12 0.08 0.03 0.06 0.08Est Surprise EPS % Surp SUE Score Free Cash Flow/Share ($) 0.28 0.46 1.09 (0.30) 0.96 (0.95)

2.14.02.11.535.833.21)M$( hsaC00.1%9.613.0$3102/13/01Quarterly Annual Annual Goodwill/Intangibles ($M) 108.6 113.5 116.2 115.2 87.0 91.1

EPS Estimates 12/2013 12/2013 12/2014 Total Assets ($M) 463.4 399.9 342.6 280.2 255.3 286.9# of Estimates 4 5 5 Long-Term Debt ($M) 38.9 36.2 51.9 53.7 45.4 75.7Current $0.01 $1.18 $1.50 Total Liabilities ($M) 204.8 174.8 155.5 113.7 102.2 131.0Month Ago $0.23 $1.35 $1.50 Book Value/Share ($) 9.13 8.06 6.79 6.08 5.65 5.85Three Mos. Ago $0.46 $1.64 $1.94 Avg Shares Outst'g (M) 28.3 27.9 27.6 27.4 27.1 26.6Sources: AAII Stock Investor Pro, Thomson Reuters and I/B/E/S. Data as of 1/28/2014.

American Vanguard Corporation operates as a holding company. It is primarily a chemical manufacturer that develops and markets products for agricultural and commercial uses. The company manufactures and formulates chemicals for crops, human and animal protection. It conducts its business through its subsidiaries. In July 2012, it completed the restructuring of the International Sales & Marketing function of its principal operating subsidiary, AMVAC Chemical Corporation. On November 30, 2012, AMVAC and TyraTech, Inc. formed Envance Technologies, LLC, in which American Vanguard Corp. owns 60% interest.

AVD passed the Group 4 screen, which looks for a combination of low P/E ratios, solid EPS growth forecasts, a strong record of sales growth, and strong relative profitability. It has a current P/E of 14.8, based on a trailing 12-month EPS of $1.58. The consensus EPS estimate for fiscal-year 2013 is $1.18 and for fiscal-year 2014 is $1.50. The long-term expected annual EPS growth rate is 19.0%. Earnings have increased 13.5% annually over the last five years, while revenues have grown 11.1% a year over the same period. AVD's operating margin of 17.5% exceeds the industry median of 8.0%. AVD shares have underperformed the S&P 500 over the last year and outperformed 17% of U.S. stocks over the same period.

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12 February 2014


Portfolio Corner: Three Enhancements to the SSR

We have three enhancements to the Stock Super-stars Report service to announce. The fi rst is a new benchmark, the second is a redesigned website and the third is a redesigned weekly email. We think these changes will both enhance your SSR experience and give you more insight into the portfolio itself.

The New BenchmarkEffective this month, we are using the exchange-

traded fund (ETF) iShares Dow Jones U.S. (IYY) to benchmark the SSR’s performance. Previously, we benchmarked our portfolio against the Wilshire 5000 index. The change does not alter the returns we have previously reported or will report in the future for the SSR portfolio, only the benchmark we measure the portfolio’s performance against is changing.

The Wilshire 5000 was a useful benchmark because it covered a broad range of stocks. However, using the actual index meant that neither expenses nor divi-dends were factored into our benchmark’s returns. Furthermore, though you can buy a fund that tracks an index, you can’t invest directly in an index—a key difference.

The iShares Dow Jones U.S. ETF is an actual fund open to all investors that can be bought and sold just like a stock. The fund tracks the performance of the Dow Jones U.S. Index and holds 1,258 stocks. The Dow Jones U.S. Index is designed to represent ap-proximately 95% of the investable U.S. stock market and represents the market-cap-weighted performance of 1,259 stocks. The index has a median market cap of $5.5 billion. The fund yields 1.8% and has an annual expense ratio of 0.20%.

The change in the benchmark allows us to show how the SSR portfolio has performed against what you would have realized by buying the benchmark fund and reinvesting the dividends. Though it would have been in our best interest to select a fund that puts the SSR performance in the best possible light, we purposely chose a fund that we felt best represents an alternative option. By doing so, we have replaced an easier benchmark to beat with a tougher benchmark to beat. As of January 29, 2014, the iShares Dow Jones U.S. ETF has realized a total return (capital gains and the reinvestment of dividends) of 108.5% since the SSR portfolio was incepted in 2002. In contrast, the Wilshire 5000 appreciated (capital gains only) by 79.6% over the same period.

The SSR portfolio has a cumulative return of 161.6% since its i nception. Over the past 12 years, the portfo-lio has topped the Wilshire 5000’s price-only returns nine times. It beat the total return of the iShares Dow Jones U.S. ETF eight times over the past 12 years. Put another way, the SSR portfolio created more wealth than the ETF. An investment of $100,000 in the SSR portfolio in 2002 would now be worth $261,553; the same investment in the iShares Dow Jones U.S. ETF would be worth $207,267.

New SSR WebsiteThe SSR website has been completely redesigned to

be both easier to use and more informative. The web-site now features fi ve key sections: Superstars Port-folio (the actual portfolio), Weekly Update (a weekly recap, which you can also receive via email), Monthly Report (which you are now reading), User’s Guide (helpful information on how to use the SSR service) and Articles (an archive of our Portfolio Corner com-mentaries). We’ve also added a new earnings calendar listing upcoming profi t reports.

The Superstars Portfolio section has been greatly enhanced. While you will still be able to see the entire portfolio on a single page, each group also has its own page. This new display allows you to see how a par-ticular stock measures up against the criteria specifi c to the group that it is a part of. For example, relative strength is shown for Group 1 (profi tability and rela-tive strength) stocks, while historical and forward-looking price-earnings ratios are shown for Group 2 (value and fi nancial strength) stocks. Plus, the data is now updated throughout the trading day.

New Friday EmailAs some of you may have already noticed, the

weekly update we send out each Friday evening has also been completely redesigned to be more readable on PCs, mobile phones and tablet devices. This email presents the latest news and updates on the SSR stocks. The new layout moves the commentary to near the top of the email, making it more front and center. Added to the weekly update are a list of upcoming earnings announcements and a table of contents to help you quickly navigate the email.

If you are not currently receiving the Weekly Up-date, go to the My Account section of the SSR website and click on SSR Weekly Email Alerts. •

Documents

ﬁ February 2014 Issue 2 - stocksuperstars.com · stocks such as Helen of Troy Lim-ited (Group 4: HELE), up 14.7%, and Alaska Air Group Inc. (Group 2: ALK), up 8.4%. But the dramatic