Tuesday, December 02, 1997

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Dec. 2, 1997)

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

There was a wee bit of confusion about the Keystone Approach following my column last week, so let me take the opportunity to clear up the mess.

Here's the screening method I use for these stocks, using the Value Line for Windows software and database.

I open by using the International filter designation for U.S. Only. This reduces the database to some 1,500 stocks.

Then I screen for stocks with a Timeliness ranking of either 1 or 2. This reduces the field to roughly 380 stocks.

Of those stocks, I screen for the thirty with the largest market caps.

The final routine is to sort the thirty Keystone stocks by their 26-Week Total Return.

The stocks with the best 26-week Total Returns are the Keystone model stocks. They are equally weighted and held for one year.

Starting in January of 1987 and continuing through November 25, 1997, the ten-stock model has returned an annualized 25.3% (before taxes). The five-stock model has returned an annualized 29.9% over the same period.

As a comparison, over the same period the S&P 500 (with dividends) has returned 16.8%; the five-stock Beating the Dow approach has returned 18.5%; and the ten-stock Beating the Dow approach has returned 18.3%.

Through November 25 of this year, the S&P 500 is up 30.2%. The ten-stock portfolio is up 43.5% and the five-stock version is up 60.6%.

A number of readers have wondered if Dell Computer's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> awesome return for 1997 has skewed the portfolio, but in fact, Dell is not in the 1997 portfolio. It's only as a result of its 1997 awesome climb that Dell has become a large-enough company to qualify as a future Keystone stock. So while it's in the current rankings one would select today, Dell hasn't been in any of the historical portfolios included in my back-test.

The current rankings if one were to use this screen today include, in order:

The Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>
EMC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %>
AirTouch Communic. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ATI)") else Response.Write("(NYSE: ATI)") end if %>
Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %>
Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>
Computer Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %>
Dayton Hudson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DH)") else Response.Write("(NYSE: DH)") end if %>
Schering-Plough <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGP)") else Response.Write("(NYSE: SGP)") end if %> 
Norwest <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOB)") else Response.Write("(NYSE: NOB)") end if %>
Home Depot <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HD)") else Response.Write("(NYSE: HD)") end if %>

Look for an updated set of rankings each Friday in this column. I'll also be tracking this portfolio as one of our six or seven model screens in the 1998 version of the Workshop. Fool on!

Year-to-Date Returns
Monthly Growth Screens
64.61%  Relative Strength  
29.90%  S&P 500 Index  
27.89%  Investing for Growth  
18.91%  EPS Plus RS  
  9.45%  Formula 90  
  6.30%  YPEG Potential  
  5.73%  Low Price/Sales  
  4.54%  Unemotional Growth  

Year-to-Date Returns
Annual Value Screens
28.21%  Beating the S&P  
26.73%  Foolish Four  
25.12%  Dow Combo  
24.36%  Dow Jones Ind Avg  
23.97%  Unemotional Value  
23.97%  Beating the Dow  
22.67%  Dogs of the Dow  

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