The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (July 24, 1997) -- If you're a reader of the Foolish Four column, you saw in today's piece two lists of the best-performing Dow stocks over the past three and five years. This is simply a way of showing how quality stocks can stay on top for many years in a row.

In the Workshop, I want to extend that topic beyond the Dow 30 and include the 100 largest American stocks (by market cap). The following list includes the twenty stocks from that list of 100 with the best annualized total return over the last five years (through the middle of July).

Dell Computer (DELL) 91.74%
Oracle (ORCL) 71.34%
Compaq Computer (CPQ) 64.38%
Cisco Systems (CSCO) 62.77%
Computer Associates (CA) 61.76%
Intel (INTC) 58.80%
Microsoft (MSFT) 48.50%
Travelers Group (TRV) 47.07%
WorldCom (WCOM) 45.46%
Citicorp (CCI) 43.36%
Merrill Lynch (MER) 39.06%
Bank of New York (BK) 38.59%
Texas Instruments (TXN) 38.40%
Warner-Lambert (WLA) 36.35%
Monsanto (MTC) 35.71%
Caterpillar (CAT) 33.90%
Gillette (G) 33.54%
Chase Manhattan (CMB) 33.40%
Medtronic (MDT) 33.13%
American Express (AXP) 32.86%

So far in 1997, the group of twenty stocks has continued to do remarkably well, just as the top-performing Dow stocks over the last three and five years have out-performed the market so far this year. This group of twenty with the best five-year record is up an astonishing average of 52.80% so far in 1997, roughly doubling the gains for the S&P 500 Index.

A caveat, however: to a small degree, this year's great gains are partly responsible for these stocks being on the top-performers list in the first place, especially in the case of Dell, where the stock is up more than 175% on the year. In fact, Dell probably wasn't even among the 100 largest American stocks five years ago, so the relevance of this as a future screen is still to be proven. Overall, though, a five-year track record reduces somewhat the influence of the last six months and the repeat performances by these stocks over the years is impressive.

I would have to test this long-term relative strength screen using historical data rather than interpolating today's numbers as I have here in order to make any real claim about such a screen, but it seems a promising area to pursue. The best stocks often keep getting better, year after year. Stay tuned; when I get a chance to look into it, I'll let you know what turns up. Fool on!

Monthly Growth Screens
(Jan. 3 to present)
51.04%  Relative Strength  
25.70%  S&P 500 Index  
21.77%  Investing for Growth  
16.93%  Unemotional Growth  
15.43%  Low Price/Sales  
12.31%  EPS Plus RS  
10.19%  YPEG Potential  
-6.02%  Formula 90  

Annual Value Screens
(Jan. 1 to present)
25.88%  Dow Jones Ind Avg  
19.74%  Beating the S&P  
17.88%  Dogs of the Dow  
16.21%  Unemotional Value  
16.21%  Beating the Dow  
14.67%  Dow Combo  
 3.96%  Foolish Four