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I try to identify mega-trends in order to determine which products and services will have accelerating demand leading to accelerating growth for the companies providing same.  Then I look for reasonable valuations (e.g. PEG around 1 or less, etc) and management that is actively pursuing sound strategies to capitalize on the opportunity.   

I want companies with a low PEG to begin with that I think have their growth rates understated by analysts (analysts obviously want to be conservative when it comes to growth and if a sector has really high growth potential they usually don't give that potential its full weight, just in case). 

If I think a sector will outperform I try to limit myself to just a couple top companies - I want to overweight the sector, but not by too much. I'm always looking for companies that fit my criteria but which are not too much like stocks I already have.  My two most recent picks: GEF and RSTI both look like good examples.
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