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At TopStockPortfolios.com, our stock selection strategy is based on the concept of "own the best and ignore the rest." Thus, we focus our attention solely on the "TopStocks" of the market -- I.E. the top ranked stocks (in terms of earnings strength and company performance) in the strongest industry groups. For our "Spotlight Report" we select one of our favorite TopStocks and provide an in-depth analysis of the company, its competitors, earnings fundamentals, valuation, chart pattern, trading points, and more.

In short, the Spotlight report offers insight into the type of analysis we perform prior to adding a position to any of our portfolios. The TopStock detailed in this report has met all of our fundamental criteria and currently displays a solid technical "set up" for a buy.

So, without further ado, here is this week's TopStock in the Spotlight:

TopStock In The Spotlight: Intuitive Surgical (ISRG)

Corporate Profile:
Intuitive Surgical, Inc., together with its subsidiaries, engages in the design, manufacture, and marketing of da Vinci surgical systems for use in urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Its surgical systems consist of a surgeon's console, a patient-side cart, and a vision system. The da Vinci surgical system controls intuitive surgical endoscopic instruments, including rigid endoscopes, blunt and sharp endoscopic dissectors, scissors, scalpels, forceps/pickups, needle holders, endoscopic retractors, electrocautery instruments, ultrasonic cutters, and accessories during a range of surgical procedures. Its surgical systems translate the surgeon's natural hand movements on instrument controls at the console into corresponding micro-movements of instruments positioned inside the patient through small puncture incisions or ports, as well as provides the surgeon with the intuitive control, range of motion, fine tissue manipulation capability, and 3-D vision characteristic of open surgery, while simultaneously allowing the surgeon to work through the small ports of MIS. The company also manufactures various EndoWrist instruments, including forceps, scissors, electrocautery, scalpels, and other surgical tools. In addition, it sells various accessory products comprising sterile drapes used to protect the sterile field during surgery; and vision products, such as replacement 3-D stereo endoscopes, camera heads, and light guides. Intuitive Surgical, Inc. sells its products through sales representatives and distributors in the United States and internationally. The company was founded in 1995 and is headquartered in Sunnyvale, California. (Source: Yahoo Finance)

S&P Sector: Health Care

Sector Rank: #7 (Out of 10 with 1 being highest)

Industry Group: Health Care - Equipment

TopStock Rating: Buy
The TopStock Rating combines technical and fundamental factors to arrive at a rating of Buy, Sell, Hold, or Accumulate. The rating is designed to let readers know our current view on each stock - assuming we do not currently hold the position.

Rating Summary:

• Buy: We would be willing to buy the stock at current levels.
  
• Accumulate: We would be willing to start to accumulate a position in the stock at current levels. However, we would not want to buy a full position at the current time and would look to add to a "starter position" on weakness.
  
• Hold: We are willing to hold the stock, but we would not be buyers at this time.
  
• Sell: We are not happy with this position and are looking for an exit point.

TopStock Score: 5.5 (The stock is ranked #5 in its sector)
The Stock Score indicates the combined score of our proprietary Earning Strength and Company Performance models. The rating scale is 0 - 10 with 10 being the highest.

Technical Model Score: Bullish
The technical model combines stock-specific and broad-market indicators that have proven to be consistent with price appreciation relative to the overall market when in a bullish mode.

Annualized Profit Projections: +101.4%
The annualized return is based on the historical relationship of the stock's technical model score to the performace of the company's stock.

TSP Short-term Chart Assessment: Accumulate Note: We'd be buyers of ISRG on a pullback to the $341 zone.
The short-term chart assessment indicates our view of the current technical "set up."

TSP Short-term Stop-Loss: $314.89
The Short-Term Stop-Loss price is the point on the chart that if violated would cause us to no longer be buyers of the stock.

Fundamental Risk Rating: Neutral Risk
The Fundamental Risk Rating is based on a variety of indicators including company fundamentals and a multitude of valuation measures. The model combines stock-specific indicators with general market factors to provide an overall risk profile.

Insider Rating: Light Selling
The Insider Rating is based on corporate insiders buying and selling activity. Academic studies have shown strong stock performance after heavy insider buying. However, please note that Insider Selling can occur for many reasons. Because of this fact, we consider heavy insider buying to be far more important than insider selling.

Key Competitors within Industry Group: (With TopStock Rating)

Baxter intl (BAX) - Hold

Stryker Corporation (SYK) - Hold

Becton Dickinson and Co (BDX) - Buy

St. Jude Medical (STJ) - Hold

Word On the Street: (Important Wall Street Research Changes)

2/24/2010: Mentioned as New Buy by Louis Navellier

1/22/2010: Upgraded to Buy from hold at Miller Tabak

Commentary:
We own ISRG in our Top-5 Portfolio and would be interested in adding to the position on any near-term weakness. However, it is important to note that the stock has enjoyed a solid run over the past year and as such, having a stop-loss in place makes sense.

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Disclosure:
At the time of publication the editor and affiliated companies own the following positions mentioned: ISRG

Note: Positions may be bought or sold while this publication is in circulation without notice.

Chart Watch: Last 3 Months

Chart Watch: Last 12 Months

How Do We Find the"TopStocks?"

A question we are constantly asked is: How do we find these TopStocks? In short, we follow a disciplined four-step process.

Step 1: Identity the Top Sectors and Industry Groups
We first determine the market’s leadership by identifying the top performing sectors and industry groups. From 10 sectors and more than 100 Industry Groups, our proprietary ranking systems (which has been designed in conjunction with the nation's leading independent research firm) identifies the top 5 sectors and the top 20 groups based on momentum, industry strength, and indicators that are specific to the industry being ranked.

Step 2: Isolate the Highest Rated Companies
From more than 2400 stocks, the system identifies the top 5% in terms of earnings strength, earnings momentum, company performance, and relative strength.

Step 3: Select the Strongest Stocks in the Top Industry Groups
We then merge the two rankings and select the top ranked companies that are in the top Industry Groups. This keeps us focused on the best performing stocks in the leading sectors of the market.

Step 4: Identify Solid Entry Points for a Trade
Once we know we have a "TopStock" that has strong earnings fundamentals, strong company performance, and is part of a top performing industry, we then dig into the charts. With the odds stacked in our favor by a very strong fundamental screening process, once we find a "TopStock" that also offers us a solid entry point on the chart - voila, we've got our TopStock Pick of the day.

Do TopStock Ratings Really Matter?

We certainly think so, but sometimes it is best to let the numbers do the talking. Below is a table showing the average annualized returns for each rating category, as determined by historical testing done by one of the country's largest independent institutional research firms.

TopStock Ratings TopStock Rating Average Annual Return 9.0 - 10.0 +32.9% 8.0 - 8.9 +23.2% 7.0 - 7.9 +11.9% 6.0 - 6.9 +10.5% 5.0 - 5.9 +6.6% 4.0 - 4.9 +4.1% 3.0 - 3.9 +2.7% 2.0 - 2.9 -0.4% 1.0 - 1.9 -5.3% 0.0 - 0.9 -6.6%

The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.

Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

The performance of the TopStock Ratings are linked monthly price changes of equal weighted hypothetical portfolios consisting of those stocks with the indicated Top Gun Rating assuming monthly rebalancing zero transaction costs. Results do not include dividends and are from the time period 12/31/95 through 6/30/02.

Index returns are price only and do not include the reinvestment of dividends. The S&P 500 is a stock market index containing the stocks of 500 large-cap corporations, most of which are US companies. The index is the most notable of the many indices owned and maintained by Standard & Poor's, a division of McGraw-Hill. S&P 500 is used in reference not only to the index but also to the 500 companies that have their common stock included in the index.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.