This column was originally published on RealMoney on Sept. 19 at 11:00 a.m. EDT. It's being republished as a bonus for TheStreet.com readers.

One way to get better selling prices is to sidestep the competition. You can sell boom boxes, MP3 players and TVs, competing directly with Wal-Mart ( WMT)and Best Buy ( BBY), or you can sell high-end customized entertainment systems and avoid competing head-on with the big boys.

Philadelphia Consolidated Holding Corp. ( PHLY) is in the insurance business which, heaven knows, has its share of big players. It largely avoids direct competition, serving such niche markets as professional liability insurance for accountants and lawyers, boat dealers, bowling centers, camp operators, homeowner associations, religious organizations and specialty properties like hospitals, hotels and nursing homes.

There are few substitutes for its niche products, and it can generally charge good rates because it isn't competing head-on with major insurance companies. The bottom line: The company is doing well and its P/E is a reasonable 14. The stock is currently trading around $37, a tad less than its 52-week high of $37.64, which it hit earlier this month.

Let's look at how two guru strategies evaluate this well-run niche player.

The O'Neil Strategy

When I mentioned that the stock just hit its 52-week high, regular readers probably guessed that a strategy in which Philly rates highly is the one I base on William O'Neil's investment style. This strategy screens for stocks that have recently gone up and are ready to break out into new territory. It flags stocks trading within 15% of its 52-week high; Philly is only 2% away.

Another factor it looks at is EPS growth. EPS grew 61% in Philly's last-reported quarter when compared with the same quarter a year earlier, and over the past five years, earnings have grown 25% annually. These are excellent numbers.

Not only have earnings been growing, their growth has been fairly consistent -- there has been only one dip in the past five years.

Philly's weighted relative strength (the stock's price performance compared with the overall market over the past year), 85, is above the strategy's minimum of 80. In its industry, 24 companies have a relative strength above 80, which shows the sector is attractive to investors.

Philly has a return on investment of 22%, well above the strategy's minimum of 17%. The founding family, who still runs the business, has about a 20% ownership interest; the O'Neil strategy likes insider ownership to be at least 15%. Philly nicely meets the strategy's benchmarks.

The Lynch Strategy

It also does a nice job meeting the Peter Lynch strategy's targets. For companies with sales greater than $1 billion, this methodology screens for P/E ratios below 40; Philly's is 14.47. Its long-term EPS growth rate of 41.5% (the average of its three-, four- and five-year EPS growth rates) is in the desired range of 20% to 50%.

Based on this, its P/E/G ratio (P/E relative to growth rate) is a very strong 0.35; anything below 0.5 is deemed wonderful.

Furthermore, its equity-to-assets ratio of 31% is way above the strategy's 5% minimum. Its return on assets is 6.75%, also well above the minimum of 1%.

Philly is well run and it has strong niche markets and a reasonably priced stock. This is an excellent addition to any portfolio in need of a financial stock.

At the time of publication, Reese held none of the stocks mentioned, although positions can change at any time.

Reese is founder and CEO of Validea.com, an investment research firm, and Validea Capital Management, an asset management firm serving affluent investors and companies. He is also co-author of the best selling book, The Market Gurus: Stock Investing Strategies You Can Use From Wall Street's Best. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Reese appreciates your feedback. Click here to send him an email.

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