THE CASH-KING PORTFOLIO
by Phil Weiss (firstname.lastname@example.org)
Towaco, NJ (Dec. 11, 1998) -- When I first decided to write tonight's report, I figured that it was just going to give me a chance to bash a company whose products I have not used in years. You see, recently on the Cash-King Companies Board there was some discussion about whether or not Exxon Corp. (NYSE: XON) is a Cash-King. My first reaction was no way. After all, the company merely sells a product that I view as not much more than a commodity, and an inferior one at that. As a matter of fact, while the odometer of the car that I drive to work every day registers nearly 148,000 miles as I write this article, it has not ever had even one drop of Exxon gasoline in its tank.
When I bought my car 8� years ago, I decided that I wanted to do whatever I could to take care of it. My wife and I take this approach as we believe that avoiding car payments whenever possible is a great way to leave ourselves a little extra money for investments and other Foolish endeavors. It also helps us have a little left over to give to a good cause like the Fool's current drive to help raise some money for Share Our Strength. At the time that I bought my car I was told that Exxon's 87-octane gas didn't have detergent in it, so I consciously chose to use other brands of gasoline instead.
Anyway, a number of Fool's on our Companies Message Board were able to convince me that I shouldn't just jump to conclusions about this company as it could merit a closer look. I found this particularly surprising because the company sits in our portfolio right now as one of our Foolish Four holdings. The conversation about Exxon on the message board actually started due to some confusion about this portion of our portfolio.
With the current negotiations between Exxon and Mobil (NYSE: MOB) to form one of the world's largest companies, I thought it might be interesting to look at this company more closely. So, I decided to take it through the Cash-King criteria found in Step 6 and see how the company looked.
Okay, let's sum things up. Exxon actually fares better than I thought it would. If I forgive the slight shortfall in gross margins, the company falls short in only three of our criteria -- its cash-to-debt ratio is too low, I don't believe that its direction exceeds its location, and its net margin falls a bit short of our target level. Could we view a company like this as a Cash-King?
I don't see a lot of room for improvement in the three categories in which the company falls short of our criteria. Plus, it sells a refined version of a raw material that is a pure commodity. I can only see this one sitting in our portfolio as a Foolish Four holding.
If you have any questions about what's been covered in tonight's report, please ask them in our Cash-King Companies Folder.
If everything goes according to our normal schedule, this will be the last report that I write until next year. So, I'd like to take this opportunity to wish each and every one of you a very happy, healthy, and Foolish Chanukah, Christmas, and New Year. Until then, I'll see you on our Message Boards.
Order your copy of David and Tom Gardner's new book, Rule Breakers, Rule Makers, in advance. This Simon & Schuster beauty doesn't arrive until January, but you can reserve your copy today! The first half of the epic book, on Rule Breakers, elucidates the Fool Port's investment style; the second half, on Rule Makers, further explains Cash-King investing.
Day Month Year History C-K -1.19% 1.97% 24.15% 24.15% S&P: -1.56% 0.12% 15.81% 15.81% NASDAQ: -1.68% 3.41% 20.98% 20.98% Cash-King Stocks Rec'd # Security In At Now Change 2/3/98 24 Microsoft 78.27 131.56 68.09% 5/1/98 55.5 Gap Inc. 34.06 47.94 40.74% 6/23/98 34 Cisco Syst 58.41 81.19 39.00% 2/3/98 22 Pfizer 82.30 114.00 38.52% 2/13/98 22 Intel 84.67 114.63 35.37% 8/21/98 44 Schering-P 47.99 56.63 17.99% 2/6/98 56 T. Rowe Pr 33.67 36.13 7.28% 2/27/98 27 Coca-Cola 69.11 66.06 -4.41% 5/26/98 18 AmExpress 104.07 97.13 -6.67% Foolish Four Stocks Rec'd # Security In At Value Change 3/12/98 20 Exxon 64.34 73.75 14.63% 3/12/98 20 Eastman Ko 63.15 72.13 14.22% 3/12/98 15 Chevron 83.34 84.63 1.54% 3/12/98 17 General Mo 72.41 69.06 -4.62% Cash-King Stocks Rec'd # Security In At Value Change 2/3/98 24 Microsoft 1878.45 3157.50 $1279.05 6/23/98 34 Cisco Syst 1985.95 2760.38 $774.43 5/1/98 55.5 Gap Inc. 1890.33 2660.53 $770.20 2/3/98 22 Pfizer 1810.58 2508.00 $697.42 2/13/98 22 Intel 1862.83 2521.75 $658.92 8/21/98 44 Schering-P 2111.7 2491.50 $379.80 2/6/98 56 T. Rowe Pr 1885.70 2023.00 $137.30 2/27/98 27 Coca-Cola 1865.89 1783.69 -$82.20 5/26/98 18 AmExpress 1873.20 1748.25 -$124.95 Foolish Four Stocks Rec'd # Security In At Value Change 3/12/98 20 Exxon 1286.70 1475.00 $188.30 3/12/98 20 Eastman Ko 1262.95 1442.50 $179.55 3/12/98 15 Chevron 1250.14 1269.38 $19.23 3/12/98 17 General Mo 1230.89 1174.06 -$56.83 CASH $120.62 TOTAL $27136.15 *Please note: On 8/4/98 $2,000 cash was added to the
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