<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (April 14, 1998) -- Yesterday I had my flight of fancy with parallels between portfolio performance and the World Golf Rankings; today it's time to report some hard news -- earnings news, that is.

Two of our 1998 Foolish Four stocks weighed in with first-quarter numbers today, and between the numbers and the outlook for the future, Wall Street was indeed pleased.

Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> said it's still having a devil of a time with rival Fuji Photo <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FUJIY)") else Response.Write("(Nasdaq: FUJIY)") end if %>, but profits jumped nevertheless, up 51% over last year. On a diluted basis, Kodak earned 69 cents a share versus 45 cents last year in the same period.

On the news, Kodak was up nearly 6%. Today's rise pushes Kodak's year-to-date return to roughly 17% (plus dividends). If Kodak's recovery continues, this could well prove to be a classic Dow Dog success story -- a company that looks awful to all around it but is strong enough that sooner or later it gets a nice grooming and heads for the Kennel Club fete.

A very similar story from International Paper <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %> today. Profits for the company more than doubled as a result of its cost-cutting efforts. On a diluted basis, International Paper's profits jumped from 11 cents a share last year at this time to 25 cents a share.

The big reason for the better numbers is the company's plan, announced last summer, to eliminate 9,000 jobs (about 10% of the total workforce) by selling unwanted assets. So while the economic troubles in Asia held sales flat from this time last year, the reduced costs dramatically increased profits for the first quarter.

International Paper jumped nearly 7% on the news and on a string of positive analyst comments. The stock (before dividends) is now up roughly 26% on the year and has the prospects of even sweeter gains if the analyst sentiment is a harbinger of what's ahead for paper stocks.

A lot of readers have raised doubts about the Foolish Four this year, since it's been lagging behind the market indices (although today did a great deal to erase the deficit). But keep in mind that the Foolish Four approach often starts sluggishly. After all, it identifies the stocks that are out of favor at the beginning of the year, and they're not likely to turn around immediately. Some will go down further [Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %>?] before rebounding. Others will drift aimlessly for a while and then start to rebound. But often when one of these Dogs begins woofin', it wakes the whole neighborhood by running around like a puppy again. Be patient and get lots of doggie treats. Two of our mutts got a flea dip today!

Current Dow Order | 1998 Dow Returns

[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.]

TODAY'S NUMBERS
Stock  Change   Last 
 -------------------- 
 UK   +   1/2   51.13 
 IP   +3  3/8   54.38 
 MO   +   5/16  40.25 
 EK   +3 13/16  70.81 
 
 
                    Day   Month    Year 
         FOOL-4   +3.64%   6.19%  13.41% 
         DJIA     +1.09%   3.53%  15.20% 
         S&P 500  +0.55%   1.27%  14.97% 
         NASDAQ   +0.99%   0.40%  17.36% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  289 Int'l Pape    43.13     54.38    26.09% 
  12/31/97  291 Union Carb    42.94     51.13    19.07% 
  12/31/97  206 Eastman Ko    60.56     70.81    16.92% 
  12/31/97  276 Philip Mor    45.25     40.25   -11.05% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  289 Int'l Pape 12463.13  15714.38  $3251.25 
  12/31/97  291 Union Carb 12494.81  14877.38  $2382.56 
  12/31/97  206 Eastman Ko 12475.88  14587.38  $2111.50 
  12/31/97  276 Philip Mor 12489.00  11109.00 -$1380.00 
  
  
                              CASH    $415.96 
                             TOTAL  $56704.09