Workshop Portfolio

<FOOLISH WORKSHOP>

Reasonable Runaways

by Jim Stevens (JimStevens@aol.com)

Burlington, VT (Jan. 28, 1999) -- Tonight I present the latest update of the Workshop's adaptation of James O'Shaughnessy's Reasonable Runaways screen. I got a few comments last time I ran the update that said the screen didn't hold the 25 or 50 stocks that the What Works on Wall Street author suggested and that some of the stocks were in merger/takeover deals.

To the first complaint I say, no biggie. Here in the Workshop we've always focused on fewer stocks than some "experts" say are necessary for diversity. To the second comment I must plead mechanical ignorance, as the screen is run completely on automatic pilot. If you plan on using the results in your "real life" investing, then you'll want to check the ones you buy to be sure their recent price appreciation isn't a result of a takeover or merger announcement (there is no Timeliness requirement for this one).

Getting to the subject at hand, Reasonable Runaways is a screen developed and tested by James O'Shaughnessy, which we have modified to be used in conjunction with The Value Line Investment Survey. The basic tenets of the screen are a low price/sales ratio and robust relative strength.

Here's the Workshop version: screen out stocks with a market cap of less than $150 million and then further cull the field to stocks with a price-to-sales ratio of less than one. Lastly, sort the remaining stocks by 26-week total return. In my Three Experimental Screens report, I laid out the screen's picks as of the beginning of 1999. Here's how the companies have done in January:

Micro Warehouse (Nasdaq: MWHS)    19.78%
Read-Rite (Nasdaq: RDRT)          12.47%
Best Buy Co. (NYSE: BBY)          44.40%
Owens & Minor (NYSE: OMI)         -3.97%
IBP Inc. (NYSE: IBP)             -11.16%
Amer. Stores (NYSE: ASC)          -0.34%
TRICON Global Rest. (NYSE: YUM)   -3.37%
SCI Systems (NYSE: SCI)           -6.82%
Genovese Drug 'A' (AMEX: GDXA)    -8.77%
Bindley Western (NYSE: BDY)      -47.97%
Apple Computer (Nasdaq: AAPL)     -1.98%
Eagle Hardware (Nasdaq: EAGL)      4.62%
FDX Corp. (NYSE: FDX)             -8.06%
Bergen Brunswig (NYSE: BBC)      -15.59%
Kroger Co. (NYSE: KR)              1.45%
Fred Meyer (NYSE: FMY)            -0.21%
Scholastic Corp. (Nasdaq: SCHL)    4.66%
Ruby Tuesday (NYSE: RI)           -7.94%
Union Camp (NYSE: UCC)            -6.05%
Park Electrochemical (NYSE: PKE)   5.24%

                      All Twenty  -1.48%
                    Top 5         12.30%
                    Top 10        -0.57%
                    Top 15        -1.69%

Not a bad showing for the top 5 -- some real hot ones in the top three spots, actually. We'll have to see how this plays out. Running the screen on the most recent Value Line yields the following twenty companies (listed in descending order of 26-week total return):

Micro Warehouse (Nasdaq: MWHS)
Excel Inds. (NYSE: EXC)
Apria Healthcare (NYSE: AHG)
Best Buy Co. (NYSE: BBY)
Park Electrochemical (NYSE: PKE)
NCR Corp. (NYSE: NCR)
Oxford Health Plans (Nasdaq: OXHP)
Eagle Hardware (Nasdaq: EAGL)
Quantum Corp. (Nasdaq: QNTM)
Briggs & Stratton (NYSE: BGG)
Amer. Freightways (Nasdaq: AFWY)
Union Camp (NYSE: UCC)
Consol. Freightways (Nasdaq: CFWY)
Amer. Stores (NYSE: ASC)
Data General (NYSE: DGN)
Western Digital (NYSE: WDC)
Jacobs Engineering (NYSE: JEC)
SCI Systems (NYSE: SCI)
TRICON Global Rest. (NYSE: YUM)
AK Steel Holding (NYSE: AKS)

This screen is one of a few that bears watching and learning. No specific test has been run using this exact methodology. Here's to a lot of Foolish experimentation!

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


Workshop Portfolio


9/28/01 as of ~5:30:00 PM EDT

Ticker Company Price
Change
Daily Price
% Change
Price
AETAETNA INC NEW0.943.36%28.94
BABOEING CO(1.04)(3.02%)33.36
CATCATERPILLAR INC1.112.53%44.91
COGCABOT OIL & GAS 'A'0.693.59%19.90
DDDU PONT (EI) DE NEMOURS0.992.74%37.14
DGXQUEST DIAGNOSTICS(0.45)(0.73%)61.42
EKEASTMAN KODAK0.421.31%32.49
GMGENERAL MOTORS1.393.38%42.55
LHLABORATORY CORP AMER HLDG(NEW)1.141.42%81.21
MOPHILIP MORRIS COS(0.76)(1.55%)48.24
NEWPNEWPORT CORP0.261.90%13.97
NVRNVR INC(0.54)(0.38%)140.41
PKXPOHANG IRON & STEEL ADS1.097.51%15.61
PVNPROVIDIAN FINANCIAL1.075.64%20.04
QCOMQUALCOMM INC(0.40)(0.84%)47.16
RJRRJ REYNOLDS TOBACCO HLDGS(0.69)(1.19%)57.31
SLESARA LEE CORPUnchg.Unchg.21.09
UNFIUNITED NATURAL FOODS0.563.18%18.15
WMIWASTE MANAGEMENT(0.01)(0.04%)26.74

Overall Return -- total % Gained (Lost)
  Day Week Month Year
To Date
Since
Inception
(12/24/1998)
Workshop1.30%7.32%(12.02%)(20.66%)(18.91%)
Comparable S&P 500n/an/an/an/a(19.07%)
S&P 500 (DA)1.95%7.48%(8.33%)(21.22%)(14.88%)
NASDAQ2.02%4.71%(17.46%)(39.68%)(31.41%)
DJIA (DA)1.68%7.07%(11.07%)(17.86%)(2.22%)

Internal Rate of Return -- Annualized Rate of % Gained (Lost)
  Since Inception (12/24/1998)
Workshop(17.62%)
vs. S&P 500(17.63%)

Trade Date # Shares Ticker Cost/Share Price Total % Ret
1/8/0126MO40.9448.2417.82%
1/8/0122RJR50.1057.3114.39%
1/8/0167UNFI16.4518.1510.34%
12/24/9824CAT43.0844.914.24%
1/8/018NVR136.63140.412.77%
1/8/0140WMI27.4426.74(2.54%)
1/8/0150SLE22.5421.09(6.42%)
1/8/0161PKX17.8315.61(12.46%)
1/8/0115DD48.8337.14(23.95%)
1/8/0129AET38.1728.94(24.19%)
1/8/0139COG28.7519.90(30.79%)
1/8/0114QCOM75.5447.16(37.57%)
1/8/018LH134.6981.21(39.70%)
12/27/9918GM73.2642.55(41.92%)
1/8/0118BA59.5333.36(43.96%)
1/8/019DGX114.4961.42(46.35%)
12/27/9920EK65.0932.49(50.08%)
1/8/0120PVN55.5020.04(63.89%)
1/8/0115NEWP74.9613.97(81.36%)

Trade Date # Shares Ticker Total Cost Current Value Total Gain
1/8/0126MO$1,064.50$1,254.24$189.74
1/8/0122RJR$1,102.25$1,260.82$158.57
1/8/0167UNFI$1,102.12$1,216.05$113.93
12/24/9824CAT$1,034.00$1,077.84$43.84
1/8/018NVR$1,093.00$1,123.28$30.28
1/8/0140WMI$1,097.50$1,069.60($27.90)
1/8/0150SLE$1,126.88$1,054.50($72.38)
1/8/0161PKX$1,087.75$952.21($135.54)
1/8/0115DD$732.50$557.10($175.40)
1/8/0129AET$1,107.00$839.26($267.74)
1/8/0139COG$1,121.37$776.10($345.28)
1/8/0114QCOM$1,057.62$660.24($397.39)
1/8/018LH$1,077.50$649.68($427.82)
1/8/0118BA$1,071.50$600.48($471.02)
1/8/019DGX$1,030.44$552.78($477.66)
12/27/9918GM$1,318.62$765.90($552.73)
12/27/9920EK$1,301.75$649.80($651.95)
1/8/0120PVN$1,110.00$400.80($709.20)
1/8/0115NEWP$1,124.37$209.55($914.83)
 
Cash: 
Total: 
$10.80
$15,681.03
 

Key
• S&P 500 (DA) = dividend adjusted. Dividends have been added to the total return of the index.
• DJIA (DA) = dividend adjusted. Dividends have been added to the total return of the DJIA.

Note
Note: The Workshop Portfolio was launched on December 24, 1998, with $4,000 which was invested in the Foolish Four strategy. Approximately $15,000 was added on January 8, 2001, to support five additional mechanical strategies. At that time approximately $1000 was transfered out of the Foolish Four strategy to bring the Foolish Four into balance with the other strategies. (That's why the Foolish Four's overall return is not consistent with stock values.) Such rebalancing will take place each year among the strategies so that each will start out with approximately the same value at the begining of the year. No more cash additions are planned. The first four tables above show the overall performance of the portfolio. Below that we also track the performance of each component strategy. All transactions are announced publicly before being made, and returns are compared daily to the S&P 500 and the Dow. (Dividends are included in the yearly, historic and annualized returns.) Stocks are chosen using strategies developed by the Workshop community.