Wednesday, April 08, 1998

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (April 8, 1998) -- Continuing this week's focus on the Dozens portfolios, today's featured model is the Formula90. If you're unfamiliar with the Formula90 screen, it begins with the 100 stocks ranked highest by the Value Line Investment Survey, and then overlays the earnings and relative strength rankings from Investor's Business Daily. With a minimum EPS score of 90, this model simply chooses the stocks with the highest RS scores.

As with the other Dozens portfolios, $1,000 is added each month to buy a new stock, so that by the end of the year, $12,000 will have been invested and 12 stocks will be included. Then each month thereafter, the oldest stock is replaced based on the current rankings.

Safeskin <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFSK)") else Response.Write("(Nasdaq: SFSK)") end if %> was the first Formula90 Dozen stock this year, acquired at $28.38 a share (all commissions are assumed to be $8). Late today, it was trading at $37.75, recording a gain so far of 31.9%.

The second stock added was Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>. The model picked Dell up at $49.72 and is now worth $66.13, also a 31.9% gain, although achieved in a shorter time span.

The third stock was United Stationers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USTR)") else Response.Write("(Nasdaq: USTR)") end if %>, which the portfolio picked up at $59.88. It's now up a negligible 0.2% at $60.50.

And just last week, the fourth stock included was Ethan Allen <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ETH)") else Response.Write("(NYSE: ETH)") end if %>. With an acquisition cost of $59.75, it's up 2.0% already, trading now at $61.44.

In terms of dollar amounts, the $4,000 of cash invested gradually over the last 98 days is now worth $4,619.56. The annualized rate of growth is cooking at 160.3%. As a comparison, the Standard & Poor's 500 annualized growth rate right now is 59.8%. To translate that to a year-to-date equivalent growth rate, the Formula90 is up 29.29%. The equivalent S&P 500 return is 13.41%.

For more details on how these annualized and year-to-date equivalents are calculated, please see yesterday's Workshop column. Fool on!

Check out the latest file updates for the Workshop:
New Rankings | 1998 Returns | New Database

[Robert Sheard is the author of the forthcoming book, The Unemotional Investor, due out from Simon & Schuster on May 12. To pre-order your copy, please visit Amazon.com, where it's available at a discounted price.]