Fool.com: Unemotional Growth (Workshop) February 11, 1999

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Unemotional Growth

Burlington, VT (Feb. 11, 1999) -- All right, Fools, as promised, here's the update on the Unemotional Growth monthly model. As stock screens go, UG is sort of the "Beer that made Milwaukee Famous" of the Foolish Workshop. It's been in full view here for about two and a half years now, and we keep an ongoing history of the model for all to see. The January 1999 results should be added to the history shortly.

The mechanics of the screen go like this: Starting with all of the US domiciled stocks ranked #1 for "Timeliness" by The Value Line Investment Survey, select the top 5 or ten stocks that have the highest EPS ranking as listed in the Investor's Business Daily. Break any EPS ranking ties with the IBD "Relative Strength" rank. Update once a month.

The thinking behind this screen is admittedly very short-term and heavily grounded in earnings growth momentum. Some have postulated that the reason such a screen works is that although short-term traders are forever chasing the hot earnings performers, the awesome power of compounding double digit earnings growth is still underestimated. That kind of crowd at the bar can make it pretty rowdy at times -- the approach is very volatile.

The screen has done amazingly well over the last 12 years. Here's how January's numbers looked (based on a 12/31/98 through 2/5/99 holding period):

Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>       37.23%
Network Assoc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETA)") else Response.Write("(Nasdaq: NETA)") end if %>     -33.02%
Papa John's Int'l <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PZZA)") else Response.Write("(Nasdaq: PZZA)") end if %>  -10.91%
MiniMed Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MNMD)") else Response.Write("(Nasdaq: MNMD)") end if %>         1.19%
Staples Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %>        -5.79%
Concord EFS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CEFT)") else Response.Write("(Nasdaq: CEFT)") end if %>        -15.93%
Compuware Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPWR)") else Response.Write("(Nasdaq: CPWR)") end if %>    -23.20%
Tellabs Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %>        17.05%
Dollar Tree Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLTR)") else Response.Write("(Nasdaq: DLTR)") end if %> -10.73%
Just For Feet <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FEET)") else Response.Write("(Nasdaq: FEET)") end if %>      -20.50%
                           UG5     -2.26%
                           UG10    -6.46%
       Standard & Poor's 500 Index  0.83%

Not so great. Is this thing just losing steam, or is this a dry patch that will again be eclipsed by a big rebound? Only time will tell, but the screen has rewarded those who held on during the backslides. Check out this "oldie but goodie" Workshop column, in whic longtime Workshop reader Lane Darnton examines the ups and downs of the UG through its first 10 years of backtesting.

As for those long-term results, through last Friday the UG5 boasts a CAGR of 36.81%, while the ten-stock UG is now at 27.04%, for the period beginning 1/1/1987.

From the Foolish Workshop Current Rankings, here are the latest Unemotional Growth picks:

Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>
Microsoft Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
Ryland Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RYL)") else Response.Write("(NYSE: RYL)") end if %>
Network Assoc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETA)") else Response.Write("(Nasdaq: NETA)") end if %>
MiniMed Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MNMD)") else Response.Write("(Nasdaq: MNMD)") end if %>
Staples Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %>
Concord EFS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CEFT)") else Response.Write("(Nasdaq: CEFT)") end if %>
Tellabs Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %>
Compuware Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPWR)") else Response.Write("(Nasdaq: CPWR)") end if %>
Oracle Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %>

Here's to staying Unemotional!

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