The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (May 29, 1997)

Yesterday we heard the rumor; today we got the news. And it turns out that someone tied NIKE's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %> shoelaces together.

As I reported yesterday, a rumor circulating on Wall Street that Warren Buffett is taking a stake in the athletics apparel maker boosted Nike's stock, even in the face of a weak overall market. Today, though, the company forecast weak fourth-quarter results and the stock was hammered by roughly 14%.

Nike said restructuring and a shortfall in expected revenue is behind the lower-than-expected earnings. The company believes it will record 51 to 56 cents a share; analysts had been expecting approximately 69 cents a share before the announcement. Immediately, of course, analysts joined the downgrade parade.

Big-name technology stocks took it on the chin today as well. After a torrid run, most of the large-caps in the group lost a few percentage points. But even after the sell-off, this group is blowing through the market like a Pentium through a simple spreadsheet.

My five-stock model hi-tech portfolio is up 46% so far this year. (This is a model where you take the fifteen largest hi-tech stocks from the S&P 500 and sort them by relative strength.)

With final returns for the day not quite in, here's how the five stocks have done in 1997:

Dell Computer (DELL)     108%
Intel (INTC)                        25%
Seagate Tech (SEG)             5%
Microsoft (MSFT)              52%
Compaq Computer (CPQ) 39%

Average 46%
S&P 500 14%

Match that approach up with a five-stock Dow portfolio, even with its trailing return of 11% or 12% and you have a ten-stock portfolio recording a gain so far this year of about 29%. We know the Dow stocks have held their own. And for the last several years, we know the tech strategy has done well. Ideally, we'd love to get the data to test the tech approach further, but even without that history, it's not a bad place to look for candidates for further study. Fool on!

Monthly Growth Screens
(Jan. 3 to present)
26.43%  Relative Strength  
12.84%  S&P 500 Index  
11.70%  Low Price/Sales  
-3.34%  YPEG Potential  
-3.86%  Investing for Growth  
-5.36%  Unemotional Growth  
-12.66%  EPS Plus RS  
-24.14%  Formula 90  

Annual Value Screens
(Jan. 1 to present)
13.72%  Dogs of the Dow  
13.68%  Dow Jones Ind Avg  
7.13%  Beating the S&P  
6.93%  Unemotional Value  
6.93%  Beating the Dow  
5.92%  Dow Combo  
0.25%  Foolish Four