Conventional wisdom says that growth in the America container-board market is heavily tied to the health of the U.S. economy, and a company's overall success is directly proportional to the size of the operation. But Packaging Corporation of America (PKG), one of the most profitable of all of the U.S. container-board companies, defies both of these notions.

PCA is a relatively small operation, when compared to its rivals. But the company is successful because of two fundamental strengths: a low debt load and flexibility of both fuel and fiber. The low overhead of a company operating with relatively little debt is easy to understand, but there are significant cost savings to be gained in this market as well, by having the ability to adapt production to whichever raw materials are cheapest and most readily available.

Illinois Tool Works Inc. (ITW) is a company on the move. This manufacturer of diversified industrial goods is currently aggressively growing its business, primarily through acquisitions of both domestic and international companies -- in fact, the company has acquired 56 companies over the past year alone. And ITW's revenue has increased in kind; the company has posted double-digit growth for the past two quarters. This trend, which has been steady over the past two years, looks to continue as ITW seems to be staying the course with its growth-by-acquisition strategy.

More importantly, ITW knows what to do once it acquires a company. The company's management operates under what is known as the 80/20 principle: That is, 20% of a company's customers generate 80% of a company's profits. This helps ITW focus attention on its most profitable customers, which helps it allocate resources where they will do the most good, and keep its margins high.

Sometimes, a company is so far ahead of its competition that the only way for the company to grow is to expand into new markets.

Ingram Micro, Inc. (IM) is the largest technology distributor in the world, offering almost 100,000 different hardware and software products to its customers for resale, along with a host of value-added services like product support, warranty management and financing. Servicing customers in more than 150 countries from 100 distribution centers worldwide, Ingram enjoys a great economy of scale.

If you want to invest in an energy resource that's cheap, has a dependable supply and a proven track record, don't forget about coal. In the very (very) long term, it may become obsolete, but for the foreseeable future coal is an excellent investment for an energy source that can immediately step in to cover the rising cost and dwindling supply of oil, while alternative energy sources need to be more fully developed before they can take over as primary suppliers of electricity and more.

If you're going to invest in coal, Peabody Energy Corporation (BTU) is an excellent bet. Frequently considered the best coal producer in its class, Peabody has the resources and size to weather any blips in the sometimes volatile coal market. Its U.S. operation is immense -- in 2006, 20% of all coal mined in America was produced by Peabody, and today, 10% of electricity produced by any source is fueled by the company's coal.

While market volatility is bad news for many companies, it is good news for TradeStation Group, Inc. (TRAD), because it means heavy trading volume.

TradeStation is an online brokerage, and when people use its services to make trades, TRAD earns commissions. Its software is best-in-class and primarily caters to the savvy investor who buys and sells quickly. Traders use TRAD's software to evaluate data and create intricate strategies, allowing them to automate rules they've established. They then can trade through TRAD's brokerage arm on a diverse group of assets, including stocks, options, and futures.The average user of TRAD makes more than 500 trades a year. However, as analysts have pointed out, its growth of new accounts has slowed, leading some to question if it can continue to be profitable in the years ahead. But TradeStation's software is far ahead of its competitors, and it is proprietary. The traders who use TRAD are sophisticated in their knowledge of the markets and rely on TradeStation's advanced software to help them make money. I can't imagine that TRAD is going to lose customers to other online brokerages.

NVIDIA Corp. (NVDA) is a company that seeks to win the game by constantly staying ahead of its competitors. One of the big three companies, along with Allegheny Technologies (ATI) and Intel Corp. (INTC) that sell highly advanced graphics microchips for computing applications of all types, NVIDIA is unique among them because it puts its primary focus on research and development -- even outsourcing production -- to make sure that in a world where technical advancement moves at the speed of light, it remains the most innovative of an innovative trio.

What happens when a highly specialized industry begins to grow very quickly? Solar power, one of the fastest growing of alternative energy sources, relies on a system of very specific machinery to work successfully. But market growth has lagged behind demand due to a bottleneck in the manufacturing process -- in the production capacity of poly-silicon, a vital component in photovoltaic cell production.

I think the potential for a company that could help break-up that bottleneck could be really extraordinary, and that's why I'm recommending Meyer Burger [MBTN: Swiss Exchange] as one of my best picks for 2008.

What happens when two companies make similar products, sell to similar customers in a limited marketplace, and use similar raw materials? Aside from being able to trade on your good name, the real difference in profit potential between the market leader and the competition is the size of your operation. Anheuser-Busch (BUD), the leader in American beer sales, has been able to control its almost 50% share of the market because none of its competition could compete with its operating costs -- especially with regard to distribution -- because no other companies were capable of working on the same scale.

But that's all about to change. Molson Coors Brewing Company (TAP), recently announced that it is merging its U.S. and Puerto Rican operations of SABMiller, which will give the new company (MillerCoors) a 30% share of the American beer market -- and finally make its operation competitive with Anheuser-Busch . Economy of scale in both production and distribution means that the company estimates a savings of $500 million annually in expenses (and as Molson's current annual operating expenses hover around $220 million, that's a LOT of savings) -- putting the company in a great position to brew up some real trouble for Busch.

We all know that diversification is one of the key fundamentals in long-term financial planning. 3M Company (MMM), a nearly century-old technology company that produces everything from surgical supplies and flat screen TVs to asphalt shingles and that old reliable Scotch Tape, shows how to put that principle into practice. Not only do the company's products cover a wide cross-section of the technology marketplace, but its increasing reach into foreign markets allows the company to offset slow sales in the U.S. with international activity, and also to take advantage of a weak dollar by encouraging foreign investment.

It doesn't take a genius to realize that the time may well be here to start investing in alternative energy sources. Solar energy, the cleanest and most renewable source of electrical power, has long been thought of as a bit of a pipe dream -- good in principle, but not as easy to put into practice. But SunPower Corporation (SPWR) the Silicon Valley-based manufacturer of solar electrical systems for homes and businesses, shows us there might be something new under the sun.

SunPower's 15 years of research and development have put it at the forefront of its field in both form and function: Its innovative technologies generate up to 50% more power than conventional solar energy systems, and its sleek black panels look so good they now grace the roof of the new Shiseido factory in New Jersey. With an exceptional product and lower overhead than its competitors due to its outsourced production facilities in Southeast Asia, SunPower looks to be able to shine brightly among its bigger competitors like Sharp (SHCAY.pk) or Nanosolar.

The year 2007 has been challenging for Knight Capital Group Inc. (NITE), a financial services company that dropped below $12 after trading near $22 in January. A recent earnings report for the third quarter probably won't do much for the stock price either, as it showed net income down 47% from the third quarter of 2006. But, as a recent Goldman Sachs report argued, it's starting to look like the battering has gone too far, and the stock may well be due for a turnaround in 2008.

The Goldman report looked to a stock repurchasing program, as well as the sale of 50% of the DirectEdge division. Other analysts have pointed out that the losses in the third quarter were due to the company's expectation that it will have to repay fees at its Deepwater hedge-fund division, and that the fund has actually been meeting and even exceeding expectations so far this year, which suggests things should look better soon. Meanwhile, commissions and fees have been rising nicely.

The other day, Allegheny Technologies Inc. (ATI), the largest stainless steel producer in the U.S., experienced a steep decline in share price. This company produces not just stainless steel but also titanium and other materials, as well as develops engineered products used in cutting tools and die casting, usually to be used in the aerospace, automotive, and appliance sectors.

Goldman Sachs just issued a report today upgrading UST Inc. (UST) to a BUY. UST Inc is a holding company not just for U.S. Smokeless Tobacco Company, which makes smokeless tobacco products (that's chaw to you and me) under the Copenhagen and Skoal brand names, but also for the wine brand, Ste. Michelle Wine Estates, that produces wine under the Chateau Ste. Michelle and Columbia Crest (contributing 15% of total sales).

Before you throw up your hands in frustration, hear me out. For just one example, take Pinnacle West (PNW). This Arizona company has two divisions: real estate development and an electric utility. Not surprisingly, the stock has really sunk since the spring as investors started fleeing with the intensifying real estate woes; back in April PNW was trading just above $50, and in early August it was down around $37.

Most trend followers would sell this stock too -- who wants to be involved with any real estate development company? As I see it, however, the company has been excessively punished for its real estate division, and it's currently undervalued when one considers its electricity division.

While the airports are still dominated by the big players, a company like Republic Airways Holdings Inc. (RJET) offers essential services that make this company a real winner for investors.

Republic is the fastest-growing regional airline in America, with its lines (Chautauqua, Republic, and Shuttle America) providing regional service to bring passengers to the bigger airlines' hubs. After a major downturn following 9/11, air travel is back up in a big way, and much of it is from the smaller regional airports that Republic serves.

More than ever, we should turn our trend-spotting eyes to beyond our borders. In our increasingly globalized economy, there is money to be made everywhere. Trends that used start in the United States can be seen starting in China, India, Japan, Germany, Argentina... to name but a few countries. Right now, the dollar is weak, so investing in foreign companies may make more sense now than ever.

Intersil Corporation (ISIL) is engaged in the design and manufacture of analog integrated circuits. Its product families address power management and signal processing functions. The firm offers a portfolio of application specific standard products and general purpose proprietary products for high-end consumer, industrial, communications, and computing markets. The company sells its devices to original equipment manufacturers, original design manufacturers and contract manufacturers in the United States, Europe and Asia. The Intersil customer list includes Dell (DELL) and IBM (IBM).

This is the fifth in a series of trend-spotting tips from Hilary Kramer's newly-released book, Ahead of the Curve.