DRIP PORTFOLIO

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Wal-Mart Revisited
Foolish consistency and investing criteria

by George Runkle (TMFRunkle)

Okinawa, Japan (May 17, 1999) -- I'm on my second week in Japan, but this report was written a week ago Friday. This is a follow-up on my investment through NetstockDirect (www.netstock.com). Netstock allows you to invest directly through its site in 300 different companies, with no brokers, often no commissions, and no share certificates to lose.

I signed up for Wal-Mart (NYSE:WMT) at $25 a month (last of the big investors that I am) and waited for the first investment to go through. It did on the 3rd of May. I was getting worried about when it would start, and I wrote Netstock to see if anything was wrong. They wrote me back promptly, and First Chicago Trust Company (the transfer agent for Wal-Mart) called me, too. Seems everything was fine, it just takes a little time. So now I am a happy investor in Wal-Mart.

I chose Wal-Mart before I read The Motley Fool's Rule Breakers, Rule Makers book, so I didn't do a test on Wal-Mart to see if it is a Rule Maker or not. Let's do that here and now. I hope it is (remember that last week I wrote about consistency). Here we go:

1. Mass Market, Repeat Purchase: Hah! Wal-Mart, you bet. Give 'em a 2 (max score).
2. Gross Margins: 21%, uh-oh, 0 points.
3. Net margins: 2%, not bad for a retailer, but 0 points again.
4. Sales Growth: 16.6%, they get a 2 pointer for this.
5. Cash to Debt Ratio: Well, they have less cash than long-term debt, so 0 points for this.
6. Foolish Flow Ratio: I come up with 1.14, they get 1 point.
7. Your Familiarity and Interest: Easy, they get a 2.

Let's total these up. They get an "8." So much for consistency, maybe I should do some "Sector Rotation" while I'm at it.

Ok, I have a cheap cop-out, but I'll take it. My earlier way of choosing companies for Drips was the following:

1. Analysts estimates of over 12% earnings growth for the next five years.
2. Increasing earnings over last five years.
3. Increasing dividends over last five years.
4. I personally know the company and its products.

Fortunately, Wal-Mart meets that simple screen, so I have an excuse for buying (whew!). However, in the future, I'll want to use the more rigorous Rule Maker method. When I get home next week, we'll see if any Japanese stocks that offer Drips here pass the Rule Maker test. For more on Wal-Mart, the Rule Maker Portfolio itself considered it last week: click here.

P.S. Mellon splits 2 for 1 after the market close today.

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5/17/99 Close

Stock    Close      Change
JNJ      91 3/4     -1 1/8
INTC     59 7/16    +1 7/16
CPB      42 15/16   +1 1/16
MEL      69 7/16    -1 3/4

          Day   Month   Year   History
Drip     0.50% (3.48%)  0.06%  13.80% 
S&P 500  0.13%  0.32%   9.29%  42.64% 
Nasdaq   1.34%  0.75%   16.84% 60.74% 



Last Rec'd  Total #  Security  In At    Current
 02/01/99   8.092    CPB      $52.852   $42.938
 03/04/99   19.468   INTC     $40.130   $59.438
 03/09/99   9.076    JNJ      $74.910   $91.750
 03/08/99   6.977    MEL      $64.293   $69.438


Last Rec'd Total # Security In At    Value    Change
 02/01/99  8.092    CPB     $427.68  $347.45  ($80.23)
 03/04/99  19.468   INTC    $781.24  $1157.12  $375.88 
 03/09/99  9.076    JNJ     $679.89  $832.72  $152.84 
 03/08/99  6.977    MEL     $448.56  $484.45   $35.89 


Base:  $2400.00
Cash:    $24.33**
Total: $2846.08

The Drip Portfolio has been divided into 100.036 shares with an average purchase price of $23.991 per share.

The portfolio began with $500 on July 28, 1997, adds $100 to invest every month, and the goal is to have $150,000 in stock by August of the year 2017. Due to the slow nature of dollar-cost-averaging, we don't expect to seriously challenge the S&P 500 for the first 3 to 5 years as we build an investment base. The long-term advantages of dollar-cost-averaging still overcome the short-term disadvantages, however. (NOTE: our investment in Campbell Soup is all but FROZEN due to fees instituted in its DRP plan.)

**Transactions in progress:

03/22/99: Sent $100 to buy more MEL.

04/27/99: Sent $100 to buy more MEL.


</THE DRIP PORTFOLIO>