Workshop Portfolio

Monday, December 15, 1997

The Daily Workshop Report
by Robert Sheard (TMF Sheard)

LEXINGTON, KY. (Dec. 15, 1997) -- With the Foolish goal of reducing trading costs and taxes, much more attention of late has been paid to the Formula 90 screen, with its impressive returns since 1987 using only annual updates. I've been somewhat reticent about this approach, however, because it has been so erratic. But in light of all the testing currently going on by Workshop readers, I've been asked to post again the Formula 90 stocks from 1987 through 1997. All of the returns mark the first Friday of one year to the first Friday of the next, so they're not quite pure annual returns. At then end, I have a footnote idea to share with you.

As a reminder, the Formula 90 screen takes the 100 stocks ranked highest for Timeliness by Value Line and imposes a minimum EPS (Earnings Per Share Growth) score of 90 from Investor's Business Daily. The stocks passing this screen are then ranked in descending order by the IBD RS (Relative Strength) rankings and the top five or ten are selected and held one year.

1987
Ashton-Tate  TATE            11.49%
Seagate Technology  SEG     -23.23%
Circuit City Stores  CC     -41.60%        
Lotus Development  LOTS      85.89%        
Nord Resources  NRD         -47.06%
Telerate, Inc  TLR           13.79%
Rollins Environmental  REN    0.45%
Laidlaw Transp 'B'  LDW.B    40.79%
Genentech  GENE              -1.75%
Affiliated Publications  AFP 59.44%

Top 5     -2.90%
Top 10     9.82%

1988
Compaq Computer  CPQ         12.84%
Computer Associates  CA       6.19%
Bolar Pharmac  BLR           12.82%         
Food Lion 'B'  FDLNB        -23.53%         
Reynolds Metals  RLM         15.75%
Phelps Dodge  PD             13.30%
Lotus Development  LOTS     -38.21%
Apple Computer  AAPL          1.49%
Pioneer Elec ADR  PIO        39.80%
Kyocera Corp (ADR)  KYO      -3.02%

Top 5      4.81%
Top 10    3.74%

1989
L.A. Gear, Inc LA            159.67%
Cincinnati Bell  CSN          25.78%
MCI Communications  MCIC      75.54%         
Durr-Fillauer  DUFM           20.39%         
Windmere Corp  WND           -55.56%
Biomet  BMET                  66.18%
Federal Nat'l Mtg  FNM       108.70%
Wolohan Lumber  WLHN          -4.92%
Newell Co  NWL                71.17%
Superior Inds Int'l  SUP      18.31%

Top 5     45.17%
Top 10   48.53%

1990
Savannah Foods  SFI           -13.89%
Shaw Inds  SHX                -32.52%
Merry-Go-Round  MGR            62.70%       
Ericsson (ADR)  ERICY           1.65%       
Optical Radiation  ORCO        -7.27%
Costco Wholesale  COST         40.88%
Microsoft Corp  MSFT           68.75%
Crawford & Co  CRD.B          -10.14%
Magma Power  MGMA             -13.24%
Mark IV Inds  IV              -37.50%

Top 5     2.13%
Top 10   5.94%

1991
AST Research  ASTA              5.88%
Amer Power Conv  APCC         233.33%
U.S. Surgical  USS            261.72%        
Clayton Homes  CMH             36.76%        
U.S. Healthcare  USHC         152.85%       
Amgen  AMGN                   273.75%
Novell, Inc  NOVL             268.94%
Intelligent Electronics  INEL  78.05%
Blockbuster Entertain  BV       1.01%
Costco Wholesale  COST        143.52%
Cordis Corp  CORD              50.00%

Top 5     160.72%
 (6 stocks because of ties)
Top 10   136.89%
 (11 stocks)

1992
Int'l Game Tech  IGT          125.00%
Amer Power Conv  APCC         101.82%
Fifty-Off Stores  FOFF        -47.98%        
Novell, Inc  NOVL              -6.37%         
Countrywide Credit  CCR        -6.91%
Conseco, Inc  CNC              46.46%
Duty Free Int'l  DFI          -58.85%
Schwab (Charles)  SCH         -12.26%
Biomet  BMET                  -45.83%
Quixote Corp  QUIX              5.77%
Stryker Corp  STRY             -16.76%

Top 5     33.11%
Top 10     7.64% (11 stocks)

1993
Tandycrafts, Inc  TAC           25.54%
Dell Computer  DELL            -46.35%
QVC Network  QVCN                4.50%
EMC Corp  EMC                  215.79%
Cisco Systems  CSCO             70.06%
Amer Power Conv  APCC           55.86%
Justin Inds  JSTN              -20.27%
Best Buy Co  BBY                56.25%
XTRA Corp  XTR                  48.44%
ADVANTA Corp 'A'  ADVNA         56.07%

Top 5     43.59% (7 stocks)
Top 10   46.59%

1994
Culp Inc  CULP                  -40.98%
EMC Corp  EMC                    14.67%
Pioneer Fin'l Serv  PFS         -34.23%
ThreeCom Corp  COMS              98.49%
DSC Communic  DIGI                4.53%
Integrated Device  IDTI          59.44%
KLA Instruments  KLAC            74.65%
Computer Associates  CA          14.72%
Lowe's Cos  LOW                  21.09%
Applied Materials  AMAT           7.95%

Top 5     25.22% (7 stocks)
Top 10   22.03%

1995
Broderbund Software  BROD        25.77%
America Online  AMER            182.79%
ThreeCom Corp  COMS              78.73%
Standard Microsystems  SMSC     -41.59%
Micron Technology  MU            80.40%
HealthCare COMPARE  HCCC         39.04%
RoTech Medical  ROTC              0.00%
Andrew Corp  ANDW                14.17%
Sun Microsystems  SUNW          131.43%
Teradyne, Inc  TER               56.06%

Top 5     65.22%
Top 10   56.68%

1996
Sun Microsystems  SUNW           37.96%
Boston Scientific  BSX           24.03%
Money Store  MONE                70.97%
Sonat Offshore  RIG              51.94%
Medic Computer Sys  MCSY         10.21%
Zions Bancorp  ZION              39.43%
Omnicare Inc  OCR                43.62%
Loral Corp  LOR                  43.10% **
Cisco Systems  CSCO              83.57%
PeopleSoft  PSFT                146.54%

** Acquired by Lockheed-Martin

Top 5     39.02%
Top 10   55.14%

1997 stocks (year ends 1/2/98)
Amer Power Conv  APCC             4.36%
Intel Corp  INTC                 14.31%
Ross Stores  ROST                51.34%
Coachmen Ind  COA               -20.51%
PeopleSoft  PSFT                 46.28%
Miller (Herman)  MLHR            83.08%
ENSCO Int'l  ESV                 57.00%
Three Com Corp  COMS            -51.28%
CKE Restaurants  CKR             67.13%
McAfee Assoc.  MCAF              12.50%  **

** now Network Assoc.  NETA

Top 5     19.16%
Top 10   26.42%

The compound growth rate for the five-stock model has been 34.55%. The ten-stock version returned 34.24%.

One final note: If one were to have taken the Formula 90 screen one step further this year and imposed a limitation that the stock must carry a 90 for both EPS and RS, but also carry an Accumulation/Distribution grade of "A" (from IBD), fourteen stocks qualified in our January 1997 database. And even with Oxford Health Plan's (Nasdaq: OXHP) implosion, the group of fourteen is up 40.3% versus the S&P 500 Index's gain of 33.0% through December 10. Before you ask, however, I can't back-test this one because the Accumulation/Distribution grade is a relatively new addition to IBD's stock tables.

Amer. Power Conv. (Nasdaq: APCC)  4.36%
Ross Stores (Nasdaq: ROST)       51.34%
Coachman Inds. (NYSE: COA)      -20.51%
PeopleSoft (Nasdaq: PSFT)        46.28%
Herman Miller (Nasdaq: MLHR)     83.08%
ENSCO Int'l (NYSE: ESV)          57.00%
Gateway 2000 (NYSE: GTW)         15.75%
Manitowac (NYSE: MTW)            33.01%
SunAmerica (NYSE: SAI)           40.67%
T. Rowe Price (Nasdaq: TROW)     60.41%
Compaq Computer (NYSE: CPQ)     101.68%
Varco Int'l (NYSE: VRC)         141.08%
Mosinee Paper (Nasdaq: MOSI)     20.42%
Oxford Health (Nasdaq: OXHP)    -70.76%

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