The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Sept. 10, 1997)

Scroll to the bottom for year-to-date Growth and Value Screen results.

For all of us Relative Strength junkies, today I'll lay out the current rankings for the thirty Dow stocks over a range of periods. We haven't done a systematic study of Relative Strength screens with the Dow stocks, but as we've been discussing the topic recently in the message folder, let's take a look using data through September 3.

Let's begin with the real long-term view. The following five stocks are ranked by their annualized returns over the past ten years:

27.09  Coca-Cola
24.47  Travelers Group
20.81  Philip Morris
20.73  Procter & Gamble
19.14  Boeing

Over the past five years, these five stocks have posted the best annualized returns:

46.17  Travelers Group
39.03  Caterpillar Inc.
37.00  Amer. Express
35.43  Hewlett-Packard
34.29  Union Carbide

Annualized return over the past three years:

51.52  Travelers Group
45.19  Int'l Business Mach.
43.32  Amer. Express
42.44  Merck & Co.
41.41  Hewlett-Packard

Total return over the past year:

90.77  Travelers Group
80.50  Amer. Express
79.15  Int'l Business Mach.
71.94  Caterpillar Inc.
55.11  Du Pont

Total return year-to-date in 1997:

67.77  Wal-Mart Stores
61.25  Caterpillar Inc.
50.47  Travelers Group
42.67  Amer. Express
37.81  Int'l Business Mach.

Total return over the last six months:

51.14  Caterpillar Inc.
43.35  Wal-Mart Stores
43.15  Int'l Business Mach.
29.84  Int'l Paper
29.81  Gen'l Electric

Total return over the last three months:

24.44  Int'l Business Mach.
24.06  Hewlett-Packard
23.33  Wal-Mart Stores
22.88  Travelers Group
22.46  Caterpillar Inc.

Total return over the last month:

3.20  Gen'l Motors
2.61  Eastman Kodak
2.24  Caterpillar Inc.
1.92  AT&T Corp.
0.75  Chevron Corp.

What's the best period to use when ranking these giants? That is, of course, the question everyone would love to have answered. My completely unscientific speculation is that somewhere in the 6-month range is a good starting point for these stocks. If Lawrence Pratt's research is correct in suggesting that the optimal holding period for Dow stocks is somewhere around 18 months, picking out the stocks starting a significant move (say, over six months) might be a way to identify those Dow stocks that are off to a long-term spurt. Some of these will obviously be the same stocks pointed out by the Dow Approach. This approach would try to identify when their moves were actually beginning whereas the Dow Approach makes no attempt to predict when or how long such a recovery will last.

We'll be able to make a more scientific study of this question after the beefed up Dow database is finished. TMF Sandy is busy compiling data to double-check the Dow Approach returns based on the new capital gains tax holding requirements, but that interim data will also allow us to test a relative strength screen as well. (While he's locked in his cell slaving away, please don't e-mail him about when the study will be finished. Answering such e-mail only cuts into his research time. And we've only left him enough food for a limited time. (You know, the Dilbert school of motivation!) Fool on.

Monthly Growth Screens
(Jan. 3 to present)
76.06%  Relative Strength  
32.39%  Investing for Growth  
23.53%  YPEG Potential  
22.87%  S&P 500 Index  
22.06%  Low Price/Sales  
21.22%  EPS Plus RS  
14.29%  Unemotional Growth  
12.09%  Formula 90  

Annual Value Screens
(Jan. 1 to present)
23.18%  Dogs of the Dow  
20.45%  Dow Combo  
19.71%  Dow Jones Ind Avg  
19.21%  Unemotional Value  
19.21%  Beating the Dow  
18.09%  Beating the S&P  
12.98%  Foolish Four