The best way to help ensure that your portfolio grows over the years is to select quality names. You can generally identify high-quality stocks by looking at two factors: the fundamentals and the valuation.

Fundamentals include past and expected earnings growth, product strength relative to the competition, management's track record, industry conditions, the balance sheet (assets vs. debt) and cash flow prospects. A company with a solid earnings history and good prospects for the future may be a sound investment candidate.

Valuation is expressed, typically, in the form of a price/earnings (P/E) ratio. This ratio shows how much investors are willing to pay for a dollar of a company's earnings. For example, a P/E of 40 means that for every $1 of per-share earnings, investors are paying $40. A company's P/E ratio should be measured against those of its competitors and those elsewhere in the market.   For high-growth stocks, the P/E is often measured against the projected earnings growth rate, so a company with annual earnings growth potential of 30% could warrant a P/E ratio of 30 or more. When its P/E ratio falls below that of the market, its peers or its growth rate, a stock may be attractive for purchase.