Keith Beverly

Seth, we obviously agree that government spending is a source of refuge right now -- II-VIis partnering with my watch list stock this month, American Science & Engineering (Nasdaq: ASEI), to develop an explosive detection system for the Army. Yet even after the precipitous drop in the stock, a few things concern me: II-VI's fixed-cost base, its inventory management, and an eventual lull in defense spending.

Why quality matters now more than ever.

Ambassadors may have a rough road ahead, but with increased market penetration and a strong balance sheet, it should survive this downturn. Some of the uncertainty surrounding the lawsuit is behind it, but the company still has to prove the BookRags.com acquisition was a good decision. And when you're in the travel business, there's always geopolitical risk to contend with.

Why quality stocks outperform in this or any other market.

Brink's Home Security (NYSE: CFL) possesses the enduring (and endearing) cash-generating and conservative management qualities we love. With the rebranding, we don't know for sure what the company will look like years down the road. But if management stays focused on the long-term health of the business and the disconnect rate stabilizes, this story should unfold nicely. Here's what to keep your eye on.

Why quality stocks outperform in this or any other market.

Guess has shown a keen ability to build its brand and grow its global presence. But I see three key challenges: a prolonged recession, its ability to maintain its brand strength as it expands, and currency exposure.

Here they are.

The little guys will set you up for outperformance.

They matter more than ever.

"The stock looked a lot more attractive when oil was near $150." I bet you've heard that before. Well, I'm adding another name to the graveyard of stocks that met the same dreadful fate as triple-digit oil prices. Small, China-based Advanced Battery Technologies (Nasdaq: ABAT) is focused on alternative energy at a time when gas is so cheap even the most ardent environmentalist is contemplating buying a Hummer. But oil prices don't have to be stratospheric (though it helps) for the company to thr

They matter more than ever.

They matter more than ever.

And it's not a crystal ball.

They matter now more than ever.

If your budget got tight and you had to decide between a new pair of shoes for yourself, a nice dinner out with the family, and clothes for your toddler, which would you choose? Yeah, we thought so.

Be on the lookout for companies that grow organically.