11 September 2009
Jackie Khor
DeMarche is a leading investment research and financial consulting firm specializing in defined benefit and defined contribution consulting and industry-leading practices in corporate finance and investor relations.
Over the past decade, DeMarche has been studying the concept of company change . We used our factor model to zero in on nine “fundamental” factors that characterize companies in terms of growth and risk management factors. Stock price is not used in the analysis. We then developed a scoring and ranking system that tracks how the 3,000 largest companies “move” or “migrate” relative to one another with respect to achieving significant growth, while simultaneously mitigating risk. The system scores companies in nine locations on a diagonal axis, as shown in Exhibit 1. Essentially, small cap value companies (location 1, the bottom right corner) can become high quality growth stocks (location 9, upper left-hand corner) in two ways, by maintaining or continuing above average growth and/or by lowering fundamental risk factors.

Criteria for DeMarche Best 100 Companies
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Take the universe of companies in the left half of the quadrant of the aggressive/defensive, value/growth area + or – ..1
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Rank companies from best to worst based on a 3-year average of the following score: an equal weight of the company’s Asset Utilization (AUT), 5-Year Earnings Growth (ERG) and all migration factors
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Do not include any company with an Altman’s Z Score below 1.81 within the last 18 months
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Do not include the ADR’s or REIT’s
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Take the top 200 companies
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Within that list, take the top company from each of 23 industries. A company outside the 200 may be used within reason. Do not go outside the top 200 for any more companies in a certain industry. Those industries simply do not have equal representation.
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Take the highest ranked companies that were ranked below no. 1 in their industry until the list is completed. This step is further constrained in that no one industry can have more than eight companies admitted to the Best 100 list.
America’s Best Top 100 Companies
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