Fool.com: Bits & Bytes (Workshop) December 14, 1998

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Bits & Bytes

Burlington, VT (December 14, 1998) -- Today I deliver the latest on the Workshop's favorite High Tech stock screen, the Bits & Bytes Portfolio. For those just tuning in, let me get you up to speed. The Workshop models generally screen for universal measures of earnings, return, dividends, growth, etc.. Well, we couldn't just stay that boring and circumspect all the time! Anybody not living under a rock knows that the hyperactive pace of technology innovation is spawning some of the fastest-growing companies in history. Combine that idea with a "bit" of the Workshop philosophy of quantitative screening, and you have the Bits & Bytes Portfolio.

Screening for the portfolio is simple, really. It's made up of the 15 largest stocks from computer and computer-related industries. Those industries are Computers & Peripherals, Internet, Software, Semiconductors, and Telecommunications Equipment, as designated in the ValueLine Investment Survey. Here's the latest Bits & Bytes port based on the most recent Value Line download, listed by market capitalizations (in millions):

333,203
198,686
156,366
130,819
127,508
86,758
70,870
68,706
42,579
40,965
36,048
35,594
33,118
28,496
23,751 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 Mach. <% 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 %>
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 %>
Hewlett-Packard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>
EMC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %>
Motorola Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") 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 %>
Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %>
Computer Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %>

To give you an idea of how these companies have been faring this year, through last Wednesday, the average return has been a whopping 102.64%.

Here's the list ranked by the most recent 26-Week total return:

America Online
EMC Corp.
Intel Corp.
Sun Microsystems
Dell Computer
Texas Instruments
Microsoft Corp.
Cisco Systems
Oracle Corp.
Compaq Computer
Int'l Business Mach.
Lucent Technologies
108.26%
83.94%
73.97%
73.87%
62.81%
62.25%
55.38%
53.08%
47.24%
45.46%
44.97%
34.76%

Although this certainly is a very intriguing screen, remember it doesn't boast any backtesting, so it's best used as a starting point for further research. A loud word of caution: The fortunes of these companies often move in unison, and they have been quite volatile in the past. Investing solely in these industry groups could leave an investor heavily exposed to a gruesome meltdown of capital.

If you are thinking of zipping up your portfolio with a high tech component, Bits & Bytes gives you a nice field of contenders to choose among. In 1998, the industries in the group went through a little refinement, and we never tracked a static field of stocks through out the year. In future updates of Bits & Bytes, I plan to provide the usual list of current picks by the screen along with a performance update of a 15-stock 1999 Bits & Bytes port selected from the last Value Line ranking.

Have a great week!

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