He also focuses on companies that can increase revenue at 3% or more each year. "A good company should grow faster than inflation," he argues. Robust free cash flow is another "thumbs up" signal. A company's size, however, doesn't matter to Foreman. He is willing to buy anything from a multinational oil company like Occidental Petroleum (OXY) -- "they're one of the lowest-cost producers of oil with a good success record in exploration" -- to a relatively unknown freight-forwarding firm such as Expeditors International of Washington (EXPD), as long as the firm produces free cash flow, a high net return on capital and barriers to new entrants. While toughest to find, the latter is the most crucial, he says.

In the case of Expeditors, a stock that the fund has owned since 1998, the business edge is its compensation structure. "Its rivals were unionized or otherwise had less flexible approaches to pay, but Expeditors' branch managers can be paid based on how profitable their branches are," he explains. Meanwhile, the company doesn't need much capital, because of the niche it fills in the otherwise capital-intensive business of freight shipping. "It has contracts with shipyards and railroads to get freight in and out of ports," Foreman rhapsodizes. "It can fill up a ship in Asia for one of its clients in days, and get it to the West Coast in record time." The boom in two-way trade across the Pacific has been great news for Expeditors, whose stock price has climbed from a split-adjusted 10.80 a share in early 2000 to about 33 a share today.

One he owns is Dionex (DNEX), another relatively small company (with market-capitalization of about $1.1 billion) he believes has the potential to become a big player as more customers sign up for its water-testing services, many of which are patent-protected. The company's stock has doubled since Foreman bought it in 2003, and now trades at around 60, reflecting growing global demand for its services, as well as a high market share. "Water testing is needed by pharmaceutical companies; it is used by people trying to control water pollution [and] by food companies trying to analyze what kinds of water compounds exist in the products they are producing," Foreman explains.

Foreman likes to hang on to stocks as long as the companies remain solid businesses, an approach that ties in well with the fund's historic approach. Current positions include Nike (NKE), first added to the portfolio back in 1986. "We've owned it since basketball shoes became a 'must own' item for consumers," Foreman says.

he fund has owned Microsoft (MSFT) stock since 1987, and Foreman has hung on to it, despite the fact that growth in both profits and revenues has slowed significantly. "It may be slower-growing, but it has also become more profitable," he says of the software business. "And growth should be in excess of inflation." In addition, he is convinced Microsoft's Windows franchise won't be threatened by Apple or other rivals, including open-source software providers.

And which companies are beneficiaries of the rising savings rate? Charles Schwab (SCHW) is one Foreman cites. "We'll look at any company that helps investors save money by offering annuities, [certificates of deposit], stocks or mutual funds, or advice in managing money," he says. It is an important component of a portfolio built to win.