National Research ( NRCI) assists the healthcare industry in the U.S. and Canada track performance at a variety of levels. The company provides survey-based performance management, analysis, tracking and improvement and educational services and develops tools that enable healthcare organizations to obtain performance measurement information necessary to comply with industry and regulatory standards and to improve their business practices.

We have rated National Research a buy since November 2006. Our rating is based on a variety of strengths, including the company's expanding profit margins, good cash flow from operations, and largely solid financial position. For the second quarter of fiscal 2008, net operating cash flow significantly increased by 58.91% when compared with the same quarter last year. Return on equity also improved slightly year over year. The company's debt-to-equity ratio is very low at 0.08, implying successful management of debt levels. While National Research reported flat earnings per share for the second quarter versus the year-earlier period, and has a recent history of volatile earnings, we feel it is poised for EPS growth in the coming year.

Although no company is perfect, we do not currently detect any significant weaknesses that are likely to detract from the generally positive outlook for this company.

American Physicians Service ( AMPH) is an insurance and financial services firm. Its subsidiaries and affiliates provide medical malpractice insurance, as well as brokerage and investment services to institutions and high net worth individuals.

American Physicians Service has been rated a buy since May 2003. While the company reported year-over-year declines in revenue and net earnings for the second quarter of fiscal 2008, it is important to bear in mind that its 2007 results included an extraordinary gain of $2.26 million in the second quarter from the acquisition of American Physicians Insurance Co., its medical malpractice subsidiary. Management indicated that the results from that subsidiary continue to be excellent and that the company exceeded the analysts' consensus estimate for the most-recent quarter. In addition, management reported that the company showed a quarter-over-quarter increase in gross written premium, which it sees as an indication of continued strong performance.

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