Monday, April 06, 1998
Cash-King Portfolio
Report
Phil Weiss
([email protected])
TOWACO, NJ (April 6, 1998) -- Its nice to be back again. The last time I appeared here, my beloved Blue Devils were storming over Radford for their first round win in the NCAA Basketball Tournament. Since then, we ran into Kentucky's stonewall defense and dream collided with reality. I just thank heavens I have other interests besides hoops... like investing!
Here in the Cash-King Portfolio, our stocks have moved up in price, but were still underperforming the S&P 500. Darn. It'll help a great deal to get get those last few buy reports completed, getting the rest of our money working for us and putting the opening commissions behind us. But, as you've come to expect, we're in no big hurry. It's bad business for me to write this, but it's true: Investors that are turned off by our very short-term underperformance of the market and our inching completion of the buy reports probably belong somewhere else in Fooldom.
The Cash-King Portfolio did take another step forward outperforming the Nasdaq last week, but failing to keep pace with the S&P 500. First let's look at the performance of our five C-K stocks and our Foolish Four stocks individually for the week. Then well review some of the important news items.
Cash-King Last This Change Coca-Cola $75.19 $80.44 + 7.0% Pfizer $95.75 $101.88 + 6.4% Microsoft $87.75 $92.94 + 5.9% T R Price $69.75 $71.44 + 2.4% Intel $78.88 $76.69 - 2.8% Fool Four Last This Change Exxon $67.63 $69.19 + 2.3% E Kodak $63.94 $64.56 + 1.0% GM $68.31 $67.50 - 1.2% Chevron $83.00 $81.94 - 1.3%
There was no major news about Pfizer (NYSE: PFE) last week. Were pretty sure that the additional run-up in the companys stock is attributable to enthusiasm about the FDAs approval of our companys impotence drug -- Viagra -- on March 27. If you want to read more about Viagra and its prospects and why it's affecting the stock, you should definitely check this link to an article from Tuesdays USA Today -- Male Impotence Drug Gets Rave Reviews.
Next up, Coca-Cola (NYSE: KO). The company got off to a good start on Monday when it announced stronger-than-expected case volume during the first quarter. Coke's growth was said to be particularly strong in Latin America.
Later in the week Coke announced plans to invest an additional $200 million in South Korea in an effort to expand its retail distribution business in that country. This investment comes in addition to the $500 million that Coke already invested in the Korean market earlier this year. Also this week, Coke asked the Vietnamese government for permission to invest more money in that venture as well. Does it not seem, Fools, that our cola giant is trying to take advantage of depressed prices in the region caused by Asian currency woes?
Aha, and there's some confirmation of that!
Cokes new chairman Doug Ivester said on Wednesday that Asia's financial turmoil would not "deter" its investment plans for the region, and that China's economic reforms could open market opportunities. "We think what's happening [the crisis] in Asia is just a short-term situation," Ivester told Reuters in an interview in the Taiwan capital of Taipei. "It absolutely does not change our commitment to, nor our optimistic outlook for, the region." Ivester also voiced even more optimism about the potential in the vast market of China. Oh, we do hope Mr. Ivester returns to the U.S. with restaurant recommendations for Taipei. Your Cash-King managers may have to travel there at some point to check out our company's expansion.
Things continued to be quiet for Baltimore-based T. Rowe Price (Nasdaq: TROW) last week. The only thing I could find was a downgrade to "Hold" from "Buy" by one of the Wise. Whatever. T. Rowe Price did move up a few bucks today on news of this proposed Citicorp-Travelers merger. Holy cow. Check out today's News Report for more on that.
Next up, Intel Corp. (Nasdaq: INTC). Last week, our chipmaker spoke about its expected capital expenditures for calendar 1998. We're spending about $5 billion this year in capital expenditures. Over a billion of that will probably be spent in the Asia-Pacific region on our existing facilities in China, Malaysia, and the Philippines, Intel president Craig Barrett told reporters during a one-day visit to Australia. [Hey, ya gotta love our executives giving interviews from all points on the globe.]
So, apparently another of our companies is planning to take advantage of the opportunity to purchase some cheap assets in Asia. While travelling through Asia last week, Barrett also addressed Intels struggles to revive growth after seeing revenue stagnate over the last 15 to 18 months. Barrett said, We need to continue to focus on micro-processors and find new users and new uses for personal computers. We also need to grow in other businesses in and around computers." Barrett listed electronic commerce, graphics chips, digital imaging, and flash memory chips as potential growth areas.
Barrett, whose visibility is increasing as he gets ready to take over as CEO on May 20, also told us that the company has outlined an initiative called "Intel Basic" that will specifically address the sub-$1000 personal computer (PC) issue. As for the currency crunch hounding Asian economies, Barrett disclosed that Intel's sales in the Asian region were "not a disaster, but not as strong as the company would like."
There was some disappointing news about Intels new Celeron chip aimed at the sub-$1,000 PC market. Initial testing of a pre-production version of the chip by computer magazine PC World showed that the chip is not as fast at running applications as its clone competitors.
Finally, late Thursday Intel said that it expected strong sales in the second half of this year. Barrett said that he expects the most rapid growth to be in Eastern Europe, China, India, and Latin America.
To read more about what our soon-to-be CEO had to say, you can and should check this link at C/Net: Intel Struggling to Revive Growth.
Last, but certainly not least (as it rose 6% on the week) is our software company, Microsoft (Nasdaq: MSFT). Softys stock price probably got a boost from a Wall Street Journal article that all but described network computers, or NCs, as dead-letter devices. But the big news for the company is that from all indications it seems to have stayed out of court entirely last week. Unthinkable! (Though today news surfaced that the Justice Department is considering an new antitrust action against the company.)
In other news, late Monday, Microsoft spoke about expected growth in sales in Latin America. By December 1998, we should be above 60% per year. And by December, 1999 we should be at 75%, Mauricio Santillan, Microsoft's director of operations for Latin America, told Reuters in an interview. "Scarcity in the information sector here is so strong that all technology projects that carry out their business well should be able to grow many times faster than GDP," he added.
And finally today, those of you that are viewing this report via Microsofts WebTV Network unit were disappointed to learn this week that monthly fees for the WebTV Plus service will be increased from $19.95 to $24.95 effective June 1.
Thats it for our coverage of the news on our Cash-King stocks for the past week. Once again there was not any news of major import related to our Foolish Four holdings, which is about par for the course for that group.
Finally again, the rest of this week I'll be spending some time talking some more about Pfizer and relaying the content of a recent call that I made to the companys Investor Relations department.
Tomorrow, Ill review some of the balance sheet numbers in the companys recently issued 10-K and take them through Step 6 of the 11 Steps to Cash-King investing. On Wednesday, I'll discuss some of the companys best-selling products, both current ones and those coming over the next 3 to 5 years. On Thursday, Ill discuss some of the advantages that Pfizer can realize by managing its cash flow better. Finally, on Friday Ill talk a bit about how to follow the price of your stocks and businesses, Foolishly. I hope you'll follow along this week's coverage of Pfizer, and drop by our message folder if you have any questions.
Phil Weiss, Fool
TODAY'S
NUMBERS
Stock Change Bid ---------------- CHV -1 15/16 80.00 KO -1 1/16 79.38 EK - 7/16 64.13 XON - 3/4 68.44 GM - 1/4 67.25 INTC -2 13/16 73.88 MSFT -3 1/16 89.88 PFE +1 5/8 103.50 TROW +1 1/16 72.50 |
Day Month Year History
C-K -0.74% 0.50% 4.47% 4.47%
S&P: -0.12% 1.78% 11.99% 11.99%
NASDAQ: -1.42% -0.36% 10.66% 10.66%
Rec'd # Security In At Now Change
2/3/98 22 Pfizer 82.30 103.50 25.76%
2/27/98 27 Coca-Cola 69.11 79.38 14.86%
2/3/98 24 Microsoft 78.27 89.88 14.83%
2/6/98 28 T. Rowe Pr 67.35 72.50 7.65%
3/12/98 20 Exxon 64.34 68.44 6.38%
3/12/98 20 Eastman Ko 63.15 64.13 1.55%
3/12/98 15 Chevron 83.34 80.00 -4.01%
3/12/98 17 General Mo 72.41 67.25 -7.12%
2/13/98 22 Intel 84.67 73.88 -12.75%
Rec'd # Security In At Value Change
2/3/98 22 Pfizer 1810.58 2277.00 $466.42
2/3/98 24 Microsoft 1878.45 2157.00 $278.55
2/27/98 27 Coca-Cola 1865.89 2143.13 $277.24
2/6/98 28 T. Rowe Pr 1885.70 2030.00 $144.30
3/12/98 20 Exxon 1286.70 1368.75 $82.05
3/12/98 20 Eastman Ko 1262.95 1282.50 $19.55
3/12/98 15 Chevron 1250.14 1200.00 -$50.14
3/12/98 17 General Mo 1230.89 1143.25 -$87.64
2/13/98 22 Intel 1862.83 1625.25 -$237.58
CASH $5666.26
TOTAL $20893.14
*The year for the S&P and Nasdaq will be as of 02/03/98
