Jim:      First, we take a look to see what stocks hit the 52 week high list last week… if there are any at all, there happens to be a handful… and then we single out all the traits that they have in common… and walla, you have got a formula for a 52 week high… maybe it is a formula that some of your companies could at least sample… the two stocks worth mentioning from last week that hit the 52 week high… they are mouthfuls… one is Schweitzer-Mauduit International (SWM)… and the other is Compellent Technologies, Inc. (CML).

So what if anything does Schweitzer Mauduit which is a cigarette paper manufacturer… and a storage network company like Compellent have in common… what can these couple companies tell us about the formula for stock success.

First, it looks like having a unique niche really helps make your company competitive… Schweitzer for example, does not just make cigarette papers, it is the largest maker of specialty papers… and is number one or number two by Marcet share in the United States, Europe, Latin America, and China… serving 5 of the largest cigarette companies in the world… that is a pretty compelling niche Marcet.

Compellent also operates in a special niche… it is a maker of storage area networks, like Brocade… which you know we like very much… or EMC, but unlike them this company focuses on small to medium size business’… companies that may not be able to afford the larger storage technologies from other companies… this is another red hot area… focusing on accounts that might be too small for the giants to care about… but there are a ton of those little accounts… that means that Compellent has the largest pool of potential customers of any of these storage area network companies.. as the average deal is only about $100,000... relatively cheap compared to larger storage systems...

The second idea besides that special niche… I mean I always find that it is just incredible that there would be just this, they make that paper… what a interesting business, right… second thing that you need, you need a secular growth driver… something that powers thru regardless of the economies… and both SWM and CML have that… you would think that the global decline in cigarette smoking would be a negative for Schweitzer Mauduit… but it is actually doing well.. how could that be… first since about 74% of its sales are from outside the US, they are with Phillip Morris not Altria… with Western Europe as its largest Marcet, it has got that weak dollar on its side… and the second part of the story though is that not all cigarette papers are created equal… this is incredibly compelling… Schweitzer Mauduit makes the kind that are more equal than others… this is low ignition propensity paper… and that makes cigarettes more fire resistant… and numerous states and countries either have laws requiring that cigarette makers use this paper… I find this ironic, fire resistant paper for a cigarette… whatever… anyway, at least they propose this kind of rule… and this company is a winner off of greater regulation of cigarettes… can you imagine… these guys make a better paper when you did not even know such a thing existed… that is a fabulous niche that has no economic exposure to speak of… so it does well in this garden variety depression/recession… the paper that is fire resistant that you have to light… yeah, I want to be in that niche.

Compellent’s secular growth story is completely different… but still powerful enough to add its stock to its 52 week high list… more and more companies, especially the smaller companies served by Compellent need storage… remember this is storage, not like the thing that they stored in “Silence of the Lambs”, this is actually like data… and they need to be able to access it and store it within the same network… which is why the storage Marcet is expected to grow at just under 10% a year from now until 2012... with small to medium size enterprise storage… Compellent‘s Marcet the fastest growth area… so, strong growth in a niche that it has the strongest growth of… the whole storage business is growing fast, and this end is growing even faster… Compellent also has a bunch of features in its storage area network technologies that increase storage capacity for important applications… making searches faster, more efficient, complicated stuff.. but all you need to know is that they believe that there tech could save customers 50% on their cooling power and floor space, data centers, big issue… want to slim them down, want to make them cheaper… the need for tech to save money is not going out of style anytime soon.

Nope, that is not all you need… this is one tough hurdle to get on that 52 week high list… it is also important that you have a record of earnings beats… Schweitzer preannounce a big, big upsize surprise… saying that it expected to earn between .80 and .90 cents for the quarter… remember, that is the company that makes fire resistant fire sticks… while the only company covering the stock expected it to earn .40 cents… the beat came thanks to high profit margins caused by cost cuts over the last three years… higher selling prices, and lower cost inflation… they can raise the price of fire resistant fire.

Compellent also beats the streets earnings expectations by .03 cents when it reported at the end of April… the company’s revenues increased by 54% over the previous year… this company is running circles around the larger storage companies that serve bigger companies.