Paul Gulden of Pax World Growth Fund

Other companies excluded from the fund include those involved with firearms, defense, nuclear power, tobacco, liquor or gambling. Like other funds in the Pax World family, it also considers a company's hiring practices and labor relations, and shuns those with poor histories in either area.

After companies have shown that they meet Pax World's non-financial requirements, Gulden searches for those that are increasing earnings and sales by more than 20% per year and that he thinks can sustain that pace. He wants to buy these stocks when they're trading at a discount to the company's growth rate.

Gulden prefers companies with leading or large market shares, strong cash flow and little debt. Companies that analysts increase earnings estimates for are on his wish list, too. About 35 stocks make their way into the fund.

Among the fund's top holdings, Gulden cites America Movil`L`ADS (AMX) as a favorite. The company, which ranked fourth in the portfolio at the end of October, is the largest provider of wireless telecommunications services in Latin America, and one of the 10 largest in the world. Gulden says that since the industry is still in its infancy in South America the company should be able to fatten its profits in coming years.

Another company Gulden likes is Pentair, Inc (PNR), which makes pools as well as products for storing, moving and treating water. The water industry is expanding and Pentair "will be one of the major participants in it," Gulden says. He expects its earnings to rise 27% this year and to jump another 50% in 2005. Pentair was the fund's ninth largest holding on Oct. 31.

The fund's No. 1 stock at that time was Urban Outfitters (URBN), a clothing store chain that Gulden describes as a "super specialty retailer." While Gulden appreciates the company's history of increasing profits by about 35%, he says he's considering paring down his position in the stock, in part because he's worried that consumer spending may decrease next year. More immediately, he doesn't want the stock to take up too much room in fund. It now represents nearly 6% of Pax World Growth's assets, Gulden says.

Urban Outfitters has been one of his strongest performers this year, as has software maker Autodesk, Inc (ADSK).

Technology stocks like Autodesk make up nearly 20% of the fund's holdings. In this area, Gulden says he favors companies that provide specialty products and services because he sees them as better poised to prosper than big conventional manufacturers.

As examples of the tech stocks he leans towards, Gulden names Cognizant Tech Solutions`A` (CTSH), a provider of software maintenance services, and Websense Inc (WBSN), which offers computer programs that let companies monitor and manage employees' Internet usage.

Contact Bob Keane with questions or comments at: [email protected]