Fool.com: Dozens Models Still Soaring (Workshop) July 8, 1998

Dozens Models Still Soaring

by Robert Sheard
(TMF Sheard)

LEXINGTON, KY. (July 8, 1998) -- The three "Dozens" portfolios using relative strength screens are beginning to pull away from the market again. Stepping into the second half of the year, all three models are on a pace to record doubles or better in 1998. (Who knows what's in store for the second half of the year? But it's an amazing first-half performance.)

Our benchmark comparison is a portfolio where one would deposit $1,000 each month into the Standard & Poor's 500 Index Spyder <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: SPY)") else Response.Write("(AMEX: SPY)") end if %>. Using an annualized return (calculated for an internal rate of return to account for the cash flow), the Spyder portfolio is on a pace to record a gain of 34.9% for all of 1998.

The Keystone Dozen model, however, is on a pace of 99.8%. The Relative Strength Dozen is on a pace to record 125.3%. And the Formula90 Dozen would gain 128.6% at its current pace. Cha-ching.

First the disclaimers, then the actual stock holdings. Annualized figures for a portfolio less than a year old, and with only seven of the eventual dozen holdings in place, can be very volatile. Any significant change in a single stock at this stage can skew the annualized numbers dramatically. In addition, while these returns do account for commissions (at $8 per trade), they don't account for taxes or dividends. The tax rate would be the one-year capital gains rate, whatever that turns out to be by the end of the year.

On to the stocks. Here are the Keystone Dozen holdings, which were acquired one per month starting on the last day in December. The returns listed are since the stocks were added to the portfolio, not their year-to-date returns.

 
  14.7%  Fifth Third Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FITB)") else Response.Write("(Nasdaq: FITB)") end if %> 
  33.8%  Schering-Plough <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGP)") else Response.Write("(NYSE: SGP)") end if %> 
  27.5%  Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %> 
  27.9%  Tele-Communications 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %> 
  35.5%  America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> 
  13.9%  Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> 
  -0.8%  EMC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %>

Here are the Relative Strength Dozen holdings, listed in the same manner:

 
 126.6%  Best Buy Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %> 
   3.9%  Ethan Allen <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ETH)") else Response.Write("(NYSE: ETH)") end if %> 
   7.2%  Alaska Air Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALK)") else Response.Write("(NYSE: ALK)") end if %> 
 -13.4%  Whole Food Markets <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WFMI)") else Response.Write("(Nasdaq: WFMI)") end if %> 
  30.1%  Capital One Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COF)") else Response.Write("(NYSE: COF)") end if %> 
  30.0%  America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> 
   1.2%  Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>

And leading the pack, here are the Formula90 Dozen holdings:

 
  55.5%  Safeskin <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFSK)") else Response.Write("(Nasdaq: SFSK)") end if %> 
  88.9%  Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> 
  15.1%  United Stationers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USTR)") else Response.Write("(Nasdaq: USTR)") end if %> 
 -16.8%  Ethan Allen <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ETH)") else Response.Write("(NYSE: ETH)") end if %> 
  30.1%  Capital One Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COF)") else Response.Write("(NYSE: COF)") end if %> 
  12.0%  Lowe's Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %> 
   6.6%  The Gap, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>

Trailing the benchmark Spyder portfolio, but rebounding slightly, is the Low Price/Sales Dozen, which is on an annualized pace to record a gain of 19.4% in 1998. Here are its holdings:

 
 -10.5%  VWR Scientific <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VWRX)") else Response.Write("(Nasdaq: VWRX)") end if %> 
  21.5%  Alaska Air Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALK)") else Response.Write("(NYSE: ALK)") end if %> 
  -1.3%  Whole Food Markets <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WFMI)") else Response.Write("(Nasdaq: WFMI)") end if %> 
  26.5%  Lowe's Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %> 
 -15.7%  Pillowtex <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PTX)") else Response.Write("(NYSE: PTX)") end if %> 
   7.2%  Lexmark Int'l 'A' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LXK)") else Response.Write("(NYSE: LXK)") end if %> 
   7.8%  Staples <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %>

I also track two Dow Dozens models. If you're following them, today's Foolish Four column recaps their less spectacular gains so far in 1998.

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

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