Monday, December 15, 1997
The Daily Workshop
Report
by Robert Sheard
(TMF Sheard)
LEXINGTON, KY. (Dec. 15, 1997) -- With the Foolish goal of reducing trading costs and taxes, much more attention of late has been paid to the Formula 90 screen, with its impressive returns since 1987 using only annual updates. I've been somewhat reticent about this approach, however, because it has been so erratic. But in light of all the testing currently going on by Workshop readers, I've been asked to post again the Formula 90 stocks from 1987 through 1997. All of the returns mark the first Friday of one year to the first Friday of the next, so they're not quite pure annual returns. At then end, I have a footnote idea to share with you.
As a reminder, the Formula 90 screen takes the 100 stocks ranked highest for Timeliness by Value Line and imposes a minimum EPS (Earnings Per Share Growth) score of 90 from Investor's Business Daily. The stocks passing this screen are then ranked in descending order by the IBD RS (Relative Strength) rankings and the top five or ten are selected and held one year.
1987 Ashton-Tate TATE 11.49% Seagate Technology SEG -23.23% Circuit City Stores CC -41.60% Lotus Development LOTS 85.89% Nord Resources NRD -47.06% Telerate, Inc TLR 13.79% Rollins Environmental REN 0.45% Laidlaw Transp 'B' LDW.B 40.79% Genentech GENE -1.75% Affiliated Publications AFP 59.44% Top 5 -2.90% Top 10 9.82% 1988 Compaq Computer CPQ 12.84% Computer Associates CA 6.19% Bolar Pharmac BLR 12.82% Food Lion 'B' FDLNB -23.53% Reynolds Metals RLM 15.75% Phelps Dodge PD 13.30% Lotus Development LOTS -38.21% Apple Computer AAPL 1.49% Pioneer Elec ADR PIO 39.80% Kyocera Corp (ADR) KYO -3.02% Top 5 4.81% Top 10 3.74% 1989 L.A. Gear, Inc LA 159.67% Cincinnati Bell CSN 25.78% MCI Communications MCIC 75.54% Durr-Fillauer DUFM 20.39% Windmere Corp WND -55.56% Biomet BMET 66.18% Federal Nat'l Mtg FNM 108.70% Wolohan Lumber WLHN -4.92% Newell Co NWL 71.17% Superior Inds Int'l SUP 18.31% Top 5 45.17% Top 10 48.53% 1990 Savannah Foods SFI -13.89% Shaw Inds SHX -32.52% Merry-Go-Round MGR 62.70% Ericsson (ADR) ERICY 1.65% Optical Radiation ORCO -7.27% Costco Wholesale COST 40.88% Microsoft Corp MSFT 68.75% Crawford & Co CRD.B -10.14% Magma Power MGMA -13.24% Mark IV Inds IV -37.50% Top 5 2.13% Top 10 5.94% 1991 AST Research ASTA 5.88% Amer Power Conv APCC 233.33% U.S. Surgical USS 261.72% Clayton Homes CMH 36.76% U.S. Healthcare USHC 152.85% Amgen AMGN 273.75% Novell, Inc NOVL 268.94% Intelligent Electronics INEL 78.05% Blockbuster Entertain BV 1.01% Costco Wholesale COST 143.52% Cordis Corp CORD 50.00% Top 5 160.72% (6 stocks because of ties) Top 10 136.89% (11 stocks) 1992 Int'l Game Tech IGT 125.00% Amer Power Conv APCC 101.82% Fifty-Off Stores FOFF -47.98% Novell, Inc NOVL -6.37% Countrywide Credit CCR -6.91% Conseco, Inc CNC 46.46% Duty Free Int'l DFI -58.85% Schwab (Charles) SCH -12.26% Biomet BMET -45.83% Quixote Corp QUIX 5.77% Stryker Corp STRY -16.76% Top 5 33.11% Top 10 7.64% (11 stocks) 1993 Tandycrafts, Inc TAC 25.54% Dell Computer DELL -46.35% QVC Network QVCN 4.50% EMC Corp EMC 215.79% Cisco Systems CSCO 70.06% Amer Power Conv APCC 55.86% Justin Inds JSTN -20.27% Best Buy Co BBY 56.25% XTRA Corp XTR 48.44% ADVANTA Corp 'A' ADVNA 56.07% Top 5 43.59% (7 stocks) Top 10 46.59% 1994 Culp Inc CULP -40.98% EMC Corp EMC 14.67% Pioneer Fin'l Serv PFS -34.23% ThreeCom Corp COMS 98.49% DSC Communic DIGI 4.53% Integrated Device IDTI 59.44% KLA Instruments KLAC 74.65% Computer Associates CA 14.72% Lowe's Cos LOW 21.09% Applied Materials AMAT 7.95% Top 5 25.22% (7 stocks) Top 10 22.03% 1995 Broderbund Software BROD 25.77% America Online AMER 182.79% ThreeCom Corp COMS 78.73% Standard Microsystems SMSC -41.59% Micron Technology MU 80.40% HealthCare COMPARE HCCC 39.04% RoTech Medical ROTC 0.00% Andrew Corp ANDW 14.17% Sun Microsystems SUNW 131.43% Teradyne, Inc TER 56.06% Top 5 65.22% Top 10 56.68% 1996 Sun Microsystems SUNW 37.96% Boston Scientific BSX 24.03% Money Store MONE 70.97% Sonat Offshore RIG 51.94% Medic Computer Sys MCSY 10.21% Zions Bancorp ZION 39.43% Omnicare Inc OCR 43.62% Loral Corp LOR 43.10% ** Cisco Systems CSCO 83.57% PeopleSoft PSFT 146.54% ** Acquired by Lockheed-Martin Top 5 39.02% Top 10 55.14% 1997 stocks (year ends 1/2/98) Amer Power Conv APCC 4.36% Intel Corp INTC 14.31% Ross Stores ROST 51.34% Coachmen Ind COA -20.51% PeopleSoft PSFT 46.28% Miller (Herman) MLHR 83.08% ENSCO Int'l ESV 57.00% Three Com Corp COMS -51.28% CKE Restaurants CKR 67.13% McAfee Assoc. MCAF 12.50% ** ** now Network Assoc. NETA Top 5 19.16% Top 10 26.42%
The compound growth rate for the five-stock model has been 34.55%. The ten-stock version returned 34.24%.
One final note: If one were to have taken the Formula 90 screen one step further this year and imposed a limitation that the stock must carry a 90 for both EPS and RS, but also carry an Accumulation/Distribution grade of "A" (from IBD), fourteen stocks qualified in our January 1997 database. And even with Oxford Health Plan's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %> implosion, the group of fourteen is up 40.3% versus the S&P 500 Index's gain of 33.0% through December 10. Before you ask, however, I can't back-test this one because the Accumulation/Distribution grade is a relatively new addition to IBD's stock tables.
Amer. Power Conv. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: APCC)") else Response.Write("(Nasdaq: APCC)") end if %> 4.36%
Ross Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ROST)") else Response.Write("(Nasdaq: ROST)") end if %> 51.34%
Coachman Inds. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COA)") else Response.Write("(NYSE: COA)") end if %> -20.51%
PeopleSoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSFT)") else Response.Write("(Nasdaq: PSFT)") end if %> 46.28%
Herman Miller <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MLHR)") else Response.Write("(Nasdaq: MLHR)") end if %> 83.08%
ENSCO Int'l <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ESV)") else Response.Write("(NYSE: ESV)") end if %> 57.00%
Gateway 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTW)") else Response.Write("(NYSE: GTW)") end if %> 15.75%
Manitowac <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTW)") else Response.Write("(NYSE: MTW)") end if %> 33.01%
SunAmerica <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SAI)") else Response.Write("(NYSE: SAI)") end if %> 40.67%
T. Rowe Price <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TROW)") else Response.Write("(Nasdaq: TROW)") end if %> 60.41%
Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> 101.68%
Varco Int'l <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VRC)") else Response.Write("(NYSE: VRC)") end if %> 141.08%
Mosinee Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MOSI)") else Response.Write("(Nasdaq: MOSI)") end if %> 20.42%
Oxford Health <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %> -70.76%
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