The Motley Fool: The Foolish Workshop, Friday, April 24, 1998

Friday, April 24, 1998

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (April 24, 1998) -- Last year we followed an informal portfolio called Bits & Bytes. It wasn't really an investment strategy as much as a large-cap technology sector fund (on paper only, of course).

We tracked the fifteen largest stocks associated with computers, and there's nothing to say about last year's results except ba-da-boom! It was just an awesome year for these stocks.

We're not following it officially in 1998, but in response to a reader's request, I ran the market-cap and industry screen using the new Value Line database today and here are the twenty largest candidates:

Microsoft Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
Intel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>
Int'l Business Machines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>
Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>
Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>
Hewlett-Packard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>
Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %>
Motorola Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %>
Computer Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %>
Oracle Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %>
Texas Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %>
EMC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %>
Electronic Data Sys. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EDS)") else Response.Write("(NYSE: EDS)") end if %>
Automatic Data Proc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AUD)") else Response.Write("(NYSE: AUD)") end if %>
First Data Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDC)") else Response.Write("(NYSE: FDC)") end if %>
Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %>
America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>
Applied Materials <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMAT)") else Response.Write("(NYSE: AMAT)") end if %>
Tellabs Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %>

As with most of our models last year (and so far this year), those linked with Relative Strength screens outperformed the others. So if we reorder this list of the Bits & Bytes stocks by their 26-week total returns, it shakes out this way:

 78.09   Lucent Technologies 
  66.03   America Online 
  56.24   Dell Computer 
  45.74   Microsoft Corp. 
  35.33   EMC Corp. 
  33.53   Tellabs Inc. 
  31.57   Cisco Systems 
  28.67   Automatic Data Proc. 
  16.76   Electronic Data Sys. 
  12.24   Computer Associates 
   9.59   Int'l Business Mach.  
   7.40   Sun Microsystems 
   2.59   Texas Instruments 
   0.35   Hewlett-Packard 
   0.22   Intel Corp. 
  -2.99   First Data Corp. 
  -5.40   Applied Materials 
 -14.40   Motorola Inc. 
 -21.57   Oracle Corp. 
 -22.67   Compaq Computer

As long-time readers know, I'm fond of large-cap stocks and this is one way of focusing on them. But keep in mind that with any sector concentration, you'll have more volatility than in a more diversified portfolio. So while it's generally useful to include some technology stocks in your stock portfolio, I'd certainly never rely only on such a screen. Have a Foolish weekend!

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

[Robert Sheard is the author of The Unemotional Investor (Simon & Schuster, 1998) available now at Amazon.com and soon at your local bookseller.]