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These two long-term issues are gaining momentum and rewarding the companies that can answer the call most effectively, says Chris Versace.

What is a Power Trend? We're talking about that today with our guest, Chris Versace. Chris, you specialize in identifying Power Trends...what are they?

A lot of people try to use different things to figure out what they want to invest in the stock market. What I do with Power Trends is look at the intersection of a number of various factors; what's going on on the economic front, demographics, psychographics, on the regulatory front, the political environment.

What we try to do is pull all these together to form our mosaic, if you will, connect the dots and see what's going on, what companies are poised to benefit from these shifts. Really, it's the company that is ahead of the curve with this tailwind at its back that pushes it along.

Unfortunately, for some companies, they're not ready to deal with the positive power of a Power Trend. They get left behind. So, some examples would be like "Always on, always connected." We see people with smartphones, tablets, doing all sorts of things, messaging people via Facebook (FB), buying stuff through Amazon (AMZN).

But when we look at how these people are always connected, there are companies that benefit from this shift, particularly toward mobile companies like Qualcomm (QCOM), Apple (AAPL), a Skyworks (SWKS). But there are also companies who are left behind, like Motorola, Nokia (NOK), or even Research In Motion (RIMM), which have been, you know, dogs. So, we use Power Trends to identify the winning companies ahead of the curve.

So, Chris, how about an example of another Power Trend?

Sure. Another power trend would be scarce resources. When we look around the globe, there are only certain amounts of certain resources that we have. Most people tend to think of oil, which in turn does gas. One of the ones that I look in on is water, and if we look at what's going on in the Midwest with the drought, we see the impact of water scarcity on food prices and other things.

So, one of the companies that I like in that is a company called Xylem (XYL), which is a spin-out of ITT (ITT). It's got a tremendous track record, huge presence in pumps, valves, analytic equipment, and sensory equipment, all of which helps manage wastewater, which is a key driver for water usage these days.