The Daily Dow Approach, 08/22/97: The Daily Dow

The Daily Dow
Friday, August 22, 1997
by Robert Sheard

LEXINGTON, KY. (Aug. 22, 1997) -- Despite the generally negative market for Blue Chips in early trading today, one of our weaker Foolish Four components for the 1997 model was a stalwart, posting a healthy gain as a result of an analyst report.

GENERAL MOTORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> was the lone winner of the Dow 30 for much of today as Donaldson, Lufkin & Jenrette raised its rating on the largest auto-maker from "market perform" to "buy." Analyst Wendy Needham registered a 12-month price target for GM of $81, which represents nearly 30% growth from yesterday's closing price.

Needham believes the restructuring of HUGHES ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GMH)") else Response.Write("(NYSE: GMH)") end if %> will occur this fall, which will lead to a partial IPO of General Motors's Delphi Automotive Systems component operations.

If you remove these business segments, the core auto business is only trading at 2.5 times estimated 1998 earnings, a hidden value that should be recognized after the restructuring, according to Needham.

Dow investors who are patient with this "dog" may well be rewarded for it yet. As is typically the case with the Dow Approach, the model points to these stocks when no one else wants them and then hangs on patiently for the market to realize their value. When the institutions start buying, the recovery gets under way, and by getting in when they're at bargain prices, the Dow investor profits handsomely. Let's hope this case follows the overall pattern. Fool on!

(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. ________________________________

1997 Foolish Four Model

Stock  Change   Last
--------------------
T    +   5/16  40.25
GM   +1 13/16  64.75
CHV  +   1/2   79.44
MMM  +1  1/8   92.63

            Day   Month    Year
        FOOL-4   +1.26%   4.14%  10.30%
        DJIA     -0.11%  -4.11%  22.28%
        S&P 500  -0.16%  -3.22%  24.68%
        NASDAQ   -0.50%   0.31%  23.83%

    Rec'd   #  Security     In At       Now    Change
   1/2/97  153 Chevron       65.00     79.44    22.21%
   1/2/97  179 Gen. Motor    55.75     64.75    16.14%
   1/2/97  120 3M            83.00     92.63    11.60%
   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  12153.94  $2208.94
   1/2/97  179 Gen. Motor  9979.25  11590.25  $1611.00
   1/2/97  120 3M          9960.00  11115.00  $1155.00
   1/2/97  479 AT&T       19998.25  19279.75  -$718.50


                             CASH   $1009.44
                            TOTAL  $55148.38