To find promising companies that are selling below their PMV, Fortune enlisted the services of Jesko and his team at Reinhart. Over the past ten years Reinhart has delivered a 12.7 percent annualized return with its PMV portfolio, beating the 8.4 percent gain of the S&P 500. Fortune has had good results with Reinhart and PMV as well. The five stocks we recommended in 2003 based on the firm's PMV analysis have risen 110 percent, clobbering the 66 percent return of the S&P 500.

To find a new batch of winners, Jesko and his team screened 3,000 stocks, focusing on mid-caps with market values of $1 billion to $12 billion. They zeroed in on firms with "symptoms of success" - high returns on capital, consistent growth and strong free cash flow. That narrowed the list to 400 companies. They eliminated those whose shares appeared overpriced based on traditional metrics, and scrutinized the 200 remaining companies to identify the ones with strong competitive advantages and expansion opportunities. Of the 150 or so that were left, Jesko and his team estimated that 50 had the potential to rise 25 percent or more. From that group, Jesko provided us with the 12 he believes are most attractive and we picked our five favorites, profiled here.