Monday, June 08, 1998
Cash-King Portfolio
Report
by Phil Weiss
([email protected])
Towaco, NJ (June 8, 1998) - I hope that everyone had a great weekend. This is one of the best times of the year to be outside and, consequently, one of the best times to be a Cash-King investor. Here in C-K Land, Monday is our day to review last week's news related to our stocks. Let's get to it.
The biggest news for us last week was Tuesday's announcement that we would be soliciting recommendations for our 8th stock purchase from you, our readers. There were dozens of fine nominees, and some great research, offered up to our Cash-King Companies Message Board. We'll be discussing the nominees and announcing the Five Finalists this week. We appreciate all the input from our fellow Fools. You guys did a great job.
Okay on to our stocks.
Cash-King Last This Change Gap Inc. $54.00 $59.13 + 9.5% Coca-Cola $78.38 $82.06 + 4.5% Pfizer $104.94 $108.38 + 3.3% AmEx $102.63 $104.50 + 1.8% Microsoft $84.81 $86.19 + 1.6% T Rowe $35.38 $35.00 - 1.1% Intel $71.38 $69.75 - 2.3% Fool Four Last This Change GM $71.88 $75.25 + 4.5% Chevron $79.88 $82.50 + 3.3% Exxon $70.50 $71.81 + 1.9% E. Kodak $71.38 $69.56 - 2.5% S&P 500 1090.82 1113.86 + 2.1% Total CK $21,152 $21,613 + 2.2%
It was a solid week for our portfolio as we outdid the S&P 500 by a smidgen. And, by Friday's close, we had officially moved ahead of the Nasdaq for the first time. The numbers read:
Day Month Year* History C-K +1.46% 2.18% 8.07% 8.07% NASDAQ:+0.73% 0.23% 7.87% 7.87% *Since February 3, 1998
This comes with 10% of our account still in cash, after spending four months to get our money invested. Nothing matters but the long-term, though; let's hope we never look back. The next target we have lined up with our nerf bow? The S&P 500.
Ok, in the leadoff position on the news front tonight is Gap Inc. (NYSE: GPS), our portfolio's "Shining Star For You To See, What Your Life Can Truly Be" performer for the week, after gaining nearly 10%. We're blaming this climb on the company's announcement Thursday that sales for the four-week period ended May 30, 1998, were $609 million versus $413 million for the same period last year. That's a 47% increase. And the all-important retail sales measure of same-store sales (sales from stores in operation for a year or more) increased 24% compared May 1997, which had shown no increase over the year previous.
If those numbers left you in a dizzied state, this might help clarify things -- our company is growing like a weed. Go Gap!
I found an unusual piece of news about Coca-Cola (NYSE: KO) last week. On Wednesday, PepsiCo Inc. (NYSE: PEP) ended a 32-year relationship with one of its largest independent bottlers. Why? Because the bottler notified Pepsi that it planned to enter into Pepsi's anti-trust suit against Coke as a counter-plaintiff on Coke's side, unless certain demands were met. Wow. Pepsi's Chairman and Chief Executive, Roger Enrico, said of the move "We don't need traitors in our family, and we're not going to have them." Coke keeps plowing ahead, up 18.75% since our purchase in February.
Despite the ups and downs of Intel's (Nasdaq: INTC) stock price, last week was relatively quiet on the news front for the only dog in our portfolio to date. A number of the Wise did cut their earnings estimates for Intel's 1998 and 1999 fiscal year, as well as lowering their outlook on the stock. Many of these cuts were attributable to the company's announcement after market close the Friday previous that the release of their next generation chip Merced would be delayed from 1999 to 2000.
Since we're long-term investors in this stock, the timing of the Merced release isn't of critical concern -- though product delays are a bummer. If you're interested in reading more about this story, you can check the following link: The Merced Chip Delayed. In other news, on Tuesday we learned that sources believe that the U.S. Federal Trade Commission's top litigator has recommended that the commission sue Intel Corporation for alleged anti-trust violations. The source said the commissioners are likely to vote on the recommendation early this week.
On Tuesday Microsoft's (Nasdaq: MSFT) CFO Greg Maffei said in an interview with Reuters that he is comfortable with Wall Street estimates that Mr. Softy can earn $0.47 a share in the fourth quarter, up from $0.40 a year ago (click here for that story). Microsoft also released its most recent 10Q report on Wednesday. In it, the company stated that it does not expect its battles with the Department of Justice to have a significant impact on its earnings. (Click here to view Microsoft's 10Q)
Now on to the leading overall gainer in our portfolio, Pfizer (NYSE: PFE). On Monday, the European Union's medicines agency confirmed that its scientific advisory committee had recommended that Pfizer's impotence treatment Viagra be marketed in Europe. During the week Pfizer's allergy medication, Zyrtec, was also approved for use by children as young as 2 years old.
Also on Monday, American Home Products (NYSE: AHP) announced that it would be merging with Monsanto (NYSE: MTC). In my report of April 8, I stated that -- in its collaboration with Monsanto -- Pfizer expected Celebra to be one of its top-selling drugs five years from now, not sooner. With all this merger talk, I wondered if there would be any impact on the agreement between Pfizer and Monsanto.
So, since I'm a shareowner of the company, I placed another call to Ron Aldridge, Pfizer's Assistant Director of Investor Relations. He said that Pfizer doesn't expect any changes to the Celebra agreement as a result of the Monsanto--AHP deal. The agreement with Monsanto is in place and Pfizer expects to be able to go forward with it. The only change that Pfizer is preparing for is dealing with a larger partner in the future. This may actually prove helpful in terms of developing future compounds as offshoots of Celebra.
There was only one piece out of American Express (NYSE: AXP) for the week. On Tuesday, the company announced that Chuck Farr, who served as vice chairman of the company and a member of the Office of the Chief Executive since 1995, will be leaving American Express at the end of June. According to The Wall Street Journal, Farr's responsibilities were diminished in an organizational reshuffling last year.
As far as news goes, the sleepiest stock in our portfolio continues to be T. Rowe Price Associates, Inc. (Nasdaq: TROW). The only news I could find was the announcement that on Thursday its Board of Directors declared a quarterly dividend of $0.085 per share (which reflects the adjustment for a 2-for-1 stock split on April 30, 1998). The dividend is payable on July 7, 1998 to stockholders of record on June 22, 1998.
As usual, we have nothing of significance to report on any of our Fool Four holdings, though we did enjoy watching General Motors tack on a 5% gain for the week.
That's it for the news. Over the next three nights, I'm going to be doing something a little different. In these reports I'll be discussing the income statement and balance sheet found in Pfizer's 1997 annual report in some detail. I hope that at the end of the three days, you'll have a better understanding of the information that is presented in these important financial statements. And, we'll be sharing our coverage of the C-K nominees, as well as narrowing them down for your vote in the days ahead.
As for me, I'm actually in Chicago for a seminar today and tomorrow and have a meeting in Cincinnati on Wednesday. Tonight I'll be out at the ballpark watching the St. Louis Cardinals and Chicago White Sox play at Comiskey Park. Yahoo! That marks the 14th major league stadium I've been to. I'm hoping to see Mark McGwire sock another homerun over everything.
Have a great evening,
Phil Weiss
TODAY'S
NUMBERS
Stock Change Bid ---------------- AXP +4 1/2 109.00 CHV -1 1/2 81.00 KO -1 81.06 GPS + 1/2 59.63 EK + 3/4 70.31 XON - 5/8 71.19 GM -1 1/4 74.00 INTC - 7/16 69.31 MSFT - 1/2 85.69 PFE + 1/16 108.44 TROW -1 1/16 33.94 |
Day Month Year History
C-K -0.22% 1.95% 7.82% 7.82%
S&P: +0.17% 2.28% 11.43% 11.43%
NASDAQ: +0.27% 0.50% 8.16% 8.16%
Cash-King Stocks
Rec'd # Security In At Now Change
2/3/98 22 Pfizer 82.30 108.44 31.76%
2/27/98 27 Coca-Cola 69.11 81.06 17.30%
5/1/98 37 Gap Inc. 51.09 59.63 16.71%
2/3/98 24 Microsoft 78.27 85.69 9.48%
5/26/98 18 American E 104.07 109.00 4.74%
2/6/98 56 T. Rowe Pr 33.67 33.94 0.78%
2/13/98 22 Intel 84.67 69.31 -18.14%
Foolish Four Stocks
Rec'd # Security In At Value Change
3/12/98 20 Eastman Ko 63.15 70.31 11.35%
3/12/98 20 Exxon 64.34 71.19 10.65%
3/12/98 17 General Mo 72.41 74.00 2.20%
3/12/98 15 Chevron 83.34 81.00 -2.81%
Cash-King Stocks
Rec'd # Security In At Value Change
2/3/98 22 Pfizer 1810.58 2385.63 $575.05
2/27/98 27 Coca-Cola 1865.89 2188.69 $322.80
5/1/98 37 Gap Inc. 1890.33 2206.13 $315.80
2/3/98 24 Microsoft 1878.45 2056.50 $178.05
5/26/98 18 American E 1873.20 1962.00 $88.80
2/6/98 56 T. Rowe Pr 1885.70 1900.50 $14.80
2/13/98 22 Intel 1862.83 1524.88 -$337.96
Foolish Four Stocks
Rec'd # Security In At Value Change
3/12/98 20 Eastman Ko 1262.95 1406.25 $143.30
3/12/98 20 Exxon 1286.70 1423.75 $137.05
3/12/98 17 General Mo 1230.89 1258.00 $27.11
3/12/98 15 Chevron 1250.14 1215.00 -$35.14
CASH $2037.63
TOTAL $21564.94
*The year for the S&P and Nasdaq will be as of 02/03/98
