The Daily Dow
Thursday, August 7, 1997
by Robert Sheard

LEXINGTON, KY. (August 7, 1997) -- It's been an "up-lifting" day for several Dow stocks, even though the overall Industrial Average slipped in late-afternoon trading. Two stocks of special note to Foolish Four investors bucked the weak momentum this afternoon and posted impressive gains because of analyst upgrades.

CATERPILLAR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAT)") else Response.Write("(NYSE: CAT)") end if %>, which has fluctuated in and out of the Foolish Four rankings in recent months, made a strong bid to keep itself out of the high yield group today after Merrill Lynch upgraded the big machinery manufacturer. Caterpillar joins INTERNATIONAL PAPER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %> in the group of cyclical stocks kicking market butt in 1997. Aren't cyclical stocks supposed to do well at the beginning of an economic expansion?

In today's other Foolish Four upgrade, it's apparent that the Wise are simply reading the Motley Fool each night and acting accordingly (heh heh). In yesterday's column I wrote about the recovery AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> has enjoyed since its recent low on April 24. Ma Bell got another big boost today when Brown Brothers Harriman upgraded the stock from a short-term "hold" to "buy." The analyst still has AT&T ranked as a long-term "market perform," however. In the last fifteen weeks, though, AT&T has gained 30%. If it keeps this up, it might actually put a positive number on the board for 1997!

Upgrades like this are always helpful in that they generate some short-term traffic in the Dow stocks we're already holding, but more importantly, they may signal the kind of long-term recovery these Dow Dogs often enjoy. Using the Dow approaches typically pick these stocks up early, when no one else wants them, and then patiently waits for the analysts and money managers to recognize the value and pile in. If there's ever a market truism that applies to the Dow Approach, it's "buy low, sell high." Forced discipline in that philosophy is how the Dow Dogs have outperformed 98 of 100 mutual fund managers over the past decade.

(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. ________________________________

Stock  Change   Last
--------------------
T    +1  3/16  40.25
GM   +   3/8   64.06
CHV  -2  3/16  78.00
MMM  -   1/16  95.94

           Day   Month    Year
        FOOL-4   +0.54%   3.79%   9.92%
        DJIA     -0.86%  -0.42%  26.98%
        S&P 500  -0.95%  -0.33%  28.41%
        NASDAQ   -0.38%   1.91%  25.80%

    Rec'd   #  Security     In At       Now    Change
   1/2/97  153 Chevron       65.00     78.00    20.00%
   1/2/97  120 3M            83.00     95.94    15.59%
   1/2/97  179 Gen. Motor    55.75     64.06    14.91%
   1/2/97  479 AT&T          41.75     40.25    -3.59%


    Rec'd   #  Security     In At     Value    Change
   1/2/97  153 Chevron     9945.00  11934.00  $1989.00
   1/2/97  120 3M          9960.00  11512.50  $1552.50
   1/2/97  179 Gen. Motor  9979.25  11467.19  $1487.94
   1/2/97  479 AT&T       19998.25  19279.75  -$718.50


                             CASH    $767.60
                            TOTAL  $54961.04