The Dozens at Mid-Year
(TMF Sheard)
LEXINGTON, KY. (June 30, 1998) -- Today closes out the first half for 1998, so let's recap the start for our Dozens models and look toward our seventh purchase for each screen. If you'll recall, the Dozens models will eventually hold twelve stocks, choosing one new stock each month. After the portfolio is full, it will begin replacing the oldest stock each month, choosing the top-ranked stock from a specific screen that's not already in the portfolio.
Our model assumes a new $1,000 is added each month to make the new purchase. So the returns I quote here are all based on internal rates of return, which account for the new cash being added each month and the different lengths of time at work for each new deposit. As such, I'll be quoting annualized returns, that is, the return the portfolio would record if it continues the same pace for the entire year.
Let's start at the bottom and work up. One model, the Low Price/Sales Dozen, is actually losing ground this year. Its annualized return as of late this afternoon is a negative 0.3%. By means of comparison for all of our models, an identical monthly deposit in the Standard & Poor's 500 Index Spyder <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: SPY)") else Response.Write("(AMEX: SPY)") end if %> has an annualized rate today of 27.9%.
The Low Price/Sales Dozen includes these stocks, in order of acquisition: VWR Scientific <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VWRX)") else Response.Write("(Nasdaq: VWRX)") end if %>, Alaska Air Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALK)") else Response.Write("(NYSE: ALK)") end if %>, Whole Foods Market <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WFMI)") else Response.Write("(Nasdaq: WFMI)") end if %>, Lowe's Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %>, Pillowtex <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PTX)") else Response.Write("(NYSE: PTX)") end if %>, and Lexmark Int'l 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LXK)") else Response.Write("(NYSE: LXK)") end if %>. The new holding being added at the close today is Staples <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %>.
The Dow Dozen is next on our list. This approach chooses the highest-ranked stock according to the Unemotional Value rankings. By now the portfolio's having to dip fairly far down the rankings to pick a new stock to add, so if you're considering using this screen for a Dozens portfolio, you may want to split your Dozens group between two or more screens. The annualized return for the Dow Dozen right now is an anemic 8.2%.
The holdings are: Union Carbide <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UK)") else Response.Write("(NYSE: UK)") end if %>, International Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>, AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>, Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %>, General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>, and Caterpillar <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAT)") else Response.Write("(NYSE: CAT)") end if %>. The seventh stock will be selected based on today's closing values, but it's very likely to be Exxon <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %>.
Also trailing the Spyder version of our Dozens approach is the Dow Racers Dozen, which chooses the Dow stock with the best returns over the previous six months (a relative strength version applied to the Dow thirty). Compared to the Spyder's annualized return of 27.9%, the Dow Racers Dozen annualized return is just 12.8%.
The Dow Racers include: AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>, Disney <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %>, Merck <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %>, Wal-Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %>, Sears <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: S)") else Response.Write("(NYSE: S)") end if %>, and McDonald's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %>. The stock being added today is DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %>.
The remaining three Dozens models are demolishing the market index. Starting with the Keystone Dozen, which focuses on large-capitalization growth stocks, this model has an annualized return so far of 89.8%, more than three times better than the Spyder comparison.
Keystone holdings so far include: Fifth Third Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FITB)") else Response.Write("(Nasdaq: FITB)") end if %>, Schering-Plough <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGP)") else Response.Write("(NYSE: SGP)") end if %>, Pfizer, <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %>, Tele-Communications, Inc. 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %>, America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>, and Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>. The new stock to be added this evening is EMC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %>.
Our remaining two models are both aggressive growth screens, relying primarily on relative strength. The Relative Strength Dozen, which chooses those Value Line stocks ranked the highest for Timeliness and the highest for the previous 6-month total returns, has an annualized return to date of 93.6%.
Holdings include: Best Buy Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %>, Ethan Allen <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ETH)") else Response.Write("(NYSE: ETH)") end if %>, Alaska Air Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALK)") else Response.Write("(NYSE: ALK)") end if %>, Whole Foods Market <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WFMI)") else Response.Write("(Nasdaq: WFMI)") end if %>, Capital One Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COF)") else Response.Write("(NYSE: COF)") end if %>, and America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>. Surprisingly, this model has made tremendous gains without the help of Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>, but it will be getting Dell as its seventh stock.
And finally, leading the pack is the other relative-strength-based model, the Formula90 Dozen. This approach establishes a minimum EPS score of 90 from Investor's Business Daily and then chooses those stocks with the highest RS score from IBD. Its annualized return so far is an impressive 102.6%.
The Formula90 Dozen holdings are: Safeskin <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFSK)") else Response.Write("(Nasdaq: SFSK)") end if %>, Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>, United Stationers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USTR)") else Response.Write("(Nasdaq: USTR)") end if %>, Ethan Allen <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ETH)") else Response.Write("(NYSE: ETH)") end if %>, Capital One Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COF)") else Response.Write("(NYSE: COF)") end if %>, and Lowe's Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %>. Joining the group this evening will be The Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>.
As a recap, then, here are the annualized returns for the six models and the S&P 500 Index Spyder model:
102.6% Formula90 Dozen
Fool on!
Check out the latest file updates for the Workshop:
[Robert Sheard is the author of the
The Unemotional
Investor (Simon & Schuster, 1998) available now at Amazon.com and
your local bookseller.]
93.6% Relative Strength Dozen
89.8% Keystone Dozen
27.9% S&P 500 Spyder Dozen
12.8% Dow Racers Dozen
8.2% Dow Dozen
-0.3% Low Price/Sales Dozen
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