Unemotional Growth Update
by Jim Stevens (JimStevens@aol.com)
Burlington, VT (April 8, 1999) -- Time for my monthly update of the Unemotional Growth model. For those of you not familiar with the UG, it's a monthly traded stock screen developed by former Foolish Workshop writer Robert Sheard. It's been backtested or tracked since January 1, 1987.
Picking the stocks for Unemotional Growth is simple; you can do it without a computer or a lot of time. All you need are the current issues of The ValueLine Investment Survey and Investor's Business Daily. Start with the Value Line Timeliness #1 list of 100 stocks. The original backtest threw out any foreign domiciled stocks. With this list in hand, rank each one by its Investor's Business Daily "EPS" score. The top 5 or 10 are the Unemotional Growth stocks. Break ties with the IBD "Relative Strength" score.
Looking back a month to my latest Unemotional Growth report, we can see what the March UG stocks were. Here is how they performed over the March holding period:
Dell Computer (Nasdaq: DELL) -4.28% Microsoft Corp. (Nasdaq: MSFT) 18.88% Tellabs Inc. (Nasdaq: TLAB) 19.11% Network Assoc. (Nasdaq: NETA) -34.57% Ryland Group (NYSE: RYL) -4.04% Oracle Corp. (Nasdaq: ORCL) -31.05% Dycom Inds. (NYSE: DY) 9.28% Waters Corp. (NYSE: WAT) 6.66% MiniMed Inc. (Nasdaq: MNMD) 14.73% CDW Computer Centers (Nasdaq: CDWC) 12.35% UG 5 -0.98% UG 10 0.71%
A pair of poor performing stocks dragged the month down. With a five- or ten-stock model this can be a pitfall. This is one reason many Workshop investors like to spread their portfolio over more than a few stocks.
The Standard & Poor's 500 Index tacked on 1.43% during the same March time frame. Year-to-date, the UG5 return is -6.56% and the UG10 1999 return is now -8.94%. For 1999, from the first UG update to April's, the S&P 500 is up 5.25%.
We keep track of the long-term track record of the UG screen on the UG History page. Including the March numbers, the UG5 has returned 35.80% since 1987 and the UG10 26.40%.
From the most recent Workshop Rankings, here are the Unemotional Growth stocks for April 1999. Already a bad start to the month, with more bleeding from Network Associates on restated earnings, analyst downgrades, and shareholder lawsuits. Ouch!
Amer. Eagle Outfitters (Nasdaq: AEOS) Microsoft Corp. (Nasdaq: MSFT) Dell Computer (Nasdaq: DELL) Chattem Inc. (Nasdaq: CHTT) Network Assoc. (Nasdaq: NETA) Dycom Inds. (NYSE: DY) MiniMed Inc. (Nasdaq: MNMD) Tellabs Inc. (Nasdaq: TLAB) Waters Corp. (NYSE: WAT) CDW Computer Centers (Nasdaq: CDWC)