The Motley Fool: The Foolish Workshop

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Nov. 12, 1997)

The recent market volatility hasn't been overly kind to our Bits & Bytes Portfolio, but it's still hard to get down on a group of fifteen stocks that has virtually doubled the S&P 500 Index year-to-date.

For those of you unfamiliar with this portfolio, it's a simple screen focused exclusively on computer and computer-related companies. I began with the listing of the handful of industries in the S&P 500 related to the computer industry and then simply sorted those stocks by market capitalization, including the fifteen largest stocks at the beginning of 1997.

In order by returns, here are the fifteen stocks we began the year with:

188%  Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>
104%  Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %>
 71%  Applied Materials <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMAT)") else Response.Write("(Nasdaq: AMAT)") end if %>
 70%  Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>
 59%  Texas Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %>
 58%  Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
 41%  Computer Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %>
 31%  Int'l Business Machines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>
 26%  Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %>
 24%  Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>
 21%  Oracle <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %>
 19%  Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>
 19%  Hewlett-Packard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
  2%  Motorola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %>
-38%  Seagate Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %>

 46%  Bits & Bytes Portfolio
 24%  S&P 500 Index Fund

Within the group of fifteen stocks, I've also been tracking a subset of five stocks that sported the highest Relative Strength rankings at the beginning of 1997 (Dell, Compaq, Intel, Microsoft, and Seagate). Even with Seagate's significant loss in 1997, this group of five stocks is sitting on a 66% gain.

So, yes, the market's correction has indeed pulled this group a little closer to Earth, but it was so far into orbit that the correction still hasn't ruined a good performance for the year. As I've mentioned before, this is virtually a miniature sector fund, so it's anything but a diverse group of stocks. Nevertheless, it's been fun to watch throughout 1997, giving those of us who prefer large-cap stocks something significant to cheer about.

If you were to choose a similar group of fifteen using today's market-cap data, the list would be very much the same. Preceding each stock is the market-cap (in millions):

161,954   Microsoft Corp.
121,762   Intel Corp.
100,927   Int'l Business Mach.
 66,237   Hewlett-Packard
 57,166   Cisco Systems
 54,754   Lucent Technologies
 46,268   Compaq Computer
 38,436   Motorola  Inc.
 35,642   Oracle Corp.
 28,062   Computer Associates
 27,663   Dell Computer
 23,148   Texas Instruments
 14,582   3Com Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %>
 13,954   Applied Materials
 13,902   Sun Microsystems

Sorted by relative strength (six-month total returns), the top five are Dell, Compaq, Computer Associates, Cisco Systems, and Lucent Technologies. Fool on!

Monthly Growth Screens
(Jan. 3 to present)
69.69%  Relative Strength  
21.11%  S&P 500 Index  
20.26%  EPS Plus RS  
15.85%  Investing for Growth  
10.70%  Formula 90  
  6.53%  Unemotional Growth  
  6.12%  Low Price/Sales  
  3.14%  YPEG Potential  

Annual Value Screens
(Jan. 1 to present)
21.65%  Beating the S&P  
18.60%  Dogs of the Dow  
18.58%  Unemotional Value  
18.58%  Beating the Dow  
18.27%  Dow Combo  
18.08%  Foolish Four
14.78%  Dow Jones Ind Avg