The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Oct. 3, 1997)

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

I've been asked a number of times what screens I use for my own stock selections. As I've said on a few occasions, I have shifted from more aggressive update schedules to longer-term strategies because of the tax brackets and trading costs involved. To that end, I've gravitated toward the large-capitalization end of the stock universe to focus on more stability. (Some would say I should do just the opposite -- buy small caps and hold for the long term -- but I'm not as comfortable in that end of the pool.)

One such series of screens I've used in the past to select possible investments is as follows:

Start with the 100 largest American stocks (by market cap).

Trim the field to those with Value Line Timeliness rankings of one or two.

The final sort is by total return over the previous six months.

For example, one year ago, 32 of the largest 100 stocks met the Timeliness criteria. If you had sorted them by the previous six months' Total Return, here is the order (along with the returns they achieved in the one year since then):

94% Intel (INTC)

191% Compaq Computer (CPQ)

-12% Nike (NKE)

28% Oracle (ORCL)

21% Gillette (G)

101% Microsoft (MSFT)

8% Monsanto (MTC)

18% Cisco Systems (CSCO)

38% Home Depot (HD)

28% Campbell Soup (CPB)

65% Allstate (ALL)

21% Coca-Cola (KO)

51% Citicorp (CCI)

40% Wal-Mart (WMT)

45% Merck (MRK)

-8% First Data (FDC)

48% Medtronic (MDT)

46% Freddie Mac (FRE)

54% Pfizer (PFE)

81% Travelers (TRV)

54% American Int'l Group (AIG)

43% DuPont (DD)

14% Johnson & Johnson (JNJ)

46% NationsBank (NB)

82% BankAmerica (BAC)

-24% Amgen (AMGN)

44% Philip Morris (MO)

71% Schering-Plough (SGP)

1% McDonald's (MCD)

39% Berkshire Hathaway (BRK.A)

28% AirTouch Communications (ATI)

31% AlliedSignal (ALD)

As a group, the 32 stocks posted a one-year return of 43% versus a 40% gain for the S&P 500. But if you start narrowing the field to the top stocks, the returns get better and better. (Incidentally, the Unemotional Growth model only returned 26% over the same twelve months.)

Top 5 64%

Top 10 52%

Top 15 49%

Top 20 48%

Top 25 48%

Top 30 44%

All 32 43%

S&P 500 40%

Today 30 of the 100 largest American companies make the grade. Here they are, sorted by Total Return over the past six months:

Dell Computer (DELL)

Compaq Computer (CPQ)

Computer Associates (CA)

Texas Instruments (TXN)

Merrill Lynch (MER)

AirTouch Communications (ATI)

Schlumberger (SLB)

Warner-Lambert (WLA)

Int'l Business Machines (IBM)

Medtronic (MDT)

Cisco Systems (CSCO)

Tyco Int'l (TYC)

BankAmerica (BAC)

Home Depot (HD)

Travelers Group (TRV)

Oracle (ORCL)

Microsoft (MSFT)

Pfizer (PFE)

Schering-Plough (SGP)

Caterpillar (CAT)

General Electric (GE)

American Int'l Group (AIG)

Bank of New York (BK)

Norwest (NOB)

Intel (INTC)

Allstate (ALL)

Colgate-Palmolive (CL)

Wal-Mart (WMT)

Freddie Mac (FRE)

AlliedSignal (ALD)

Let's follow along and see how these thirty stocks fare over the next twelve months.

This weekend represents the end of our third quarter for the Workshop screens. I'll be posting the new monthly database sometime Saturday night (on our AOL site). While the database won't make it to the official spot on the website until Monday, someone will post it in the web message board for the Workshop so you can have a look at it over the weekend.

Here is the new Investing for Growth order if you're looking for a sneak preview:

Iomega (IOM)

Western Digital (WDC)

Dell Computer (DELL)

Quantum (QNTM)

Sun Microsystems (SUNW)

Compaq Computer (CPQ)

Dollar General (DG)

Franklin Resources (BEN)

T. Rowe Price (TROW)

Claire's Stores (CLE)

Have a Foolish weekend!

Monthly Growth Screens
(Jan. 3 to present)
92.29%  Relative Strength  
40.79%  Investing for Growth  
33.64%  EPS Plus RS  
29.02%  S&P 500 Index  
28.52%  YPEG Potential  
24.55%  Low Price/Sales  
24.18%  Unemotional Growth  
23.57%  Formula 90  

Annual Value Screens
(Jan. 1 to present)
27.60%  Dogs of the Dow  
25.31%  Dow Combo  
25.02%  Beating the S&P  
24.66%  Dow Jones Ind Avg  
23.42%  Unemotional Value  
23.42%  Beating the Dow  
17.27%  Foolish Four