Monday, June 15, 1998

Our Next Stock Pick
by Al Levit
([email protected])

Glendale, CA (June 15, 1998) -- Many Fools were probably ignoring their finances this weekend for a breezy, long bike ride or some other outdoor activity -- or they found themselves sitting in the armchair, chips on stomach, watching the NBA finals. You'll remember that in my interview with Tom last week, I predicted that the Utah Jazz would win in six games. Ouch. I was wrong. Since accountability is so important to us in the financial world, I figured I had to apply it to my "not-so-hot tip" on the NBA championship!

There was a lot going on in Cash-Kingdom last week. The great experiment in group stock selection continued in our message boards as you and your Cash-King managers debated the nominees to narrow down our list to five. We've completed that process -- and the list this evening includes Tellabs, General Electric, Cisco, Dell, and Schering Plough. To read more about these companies, please drop by the Web Cash-King Companies Folder.

And please cast your vote by Thursday evening. You can do so now by clicking this week's Motley Fool Poll. Whichever company receives the most votes will be added to the Cash-King portfolio next week.

We begin, as always with our summary of how our stocks did last week. 

Cash-King Last   This    Change 
 Gap Inc.  $59.13  $61.00 + 3.2% 
 Pfizer   $108.38 $109.50 + 1.0% 
 Microsoft $86.19  $85.69 - 0.6% 
 Coca-Cola $82.06  $80.69 - 1.7% 
 AmEx     $104.50 $102.75 - 1.7% 
 Intel     $69.75  $68.44 - 1.9% 
 T Rowe    $35.00  $33.88 - 3.2% 
  
 Fool Four Last    This   Change 
 GM        $75.25  $69.88 - 7.1% 
 Chevron   $82.50  $81.38 - 1.4% 
 Exxon     $71.81  $69.31 - 3.5% 
 E. Kodak  $69.56  $69.81 + 0.4% 
  
 S&P 500  1113.86 1098.84 - 1.3% 
 Total CK $21,613 $21,382 - 1.1%

In terms of actual company news, first up is Coca-Cola (NYSE: KO). Coke announced on June 9 that it and the NBA had entered into a four-year marketing plan to cross-promote Sprite as part of an ongoing 100-year global marketing partnership. M. Douglas Ivester, Coke's chairman and CEO, went on to say "no matter how the NBA grows over the next 100 years, Sprite will be there." There's a good chance the NBA will go global in the next 20 years. Sprite will be there.

And that 100-year thinking on the part of Coke... that's what Cash-King investing is all about.

There was also significant news out last week about Pfizer (NYSE: PFE) and its new blockbuster drug Viagra. About 1.7 million prescriptions for Viagra have been written so far, and the drug has generally been shown to be safe and effective. However, there have been some problems and 16 deaths have been reported.

Naturally, these deaths are taken very seriously, and each one is investigated very carefully. In the majority of cases to date, the deaths have stemmed from combining Viagra with other drugs, such as nitrates. Viagra has always been sold with a label that warns against such drug combinations. We should also remember that all drugs have side effects. I think these deaths from Viagra, while tragic, are not material news for the company so long as they can continue to educate the public about the product.

The last Cash-King companies with significant news this week were our high technology Wintel duo of Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC). They now share the dubious honor of both being sued by the Federal government for violation of anti-trust laws. Microsoft chairman Bill Gates responded to the government suit out of court this week in a letter to The Economist magazine in which he wrote, "America's antitrust laws do not provide any basis for government regulators to design software products." The entire letter is available at Gates Responds to the Economist.

Intel's response to its lawsuit was a little more standard. It filed a 64-page brief with the U.S. Court of Appeals.

Normally I wouldn't mention anything about the Foolish Four contingent, but it got smoked last week. The most damaged was General Motors (NYSE: GM), down 7%. The company was hit by two strikes last week, and the entire company may well be shut down any day now.

No settlement is on the horizon. The issue is jobs. GM management feels that they must move thousands of jobs out of the country to stay competitive, and the union is steadfast about the need to retain as many jobs as possible. As a Foolish Four holding, this activity will not change our action towards this stock (current plans are to hold for at least 18 months and one day from purchase). Even so, this strike is probably the most significant news to affect any company in our portfolio, and it should be noted.

To close, be sure to drop by and cast a vote in the Cash-King Online Poll. Also, drop by the Cash-King Companies Folder to tell us about your vote.

Fool on,

Al Levit

TODAY'S NUMBERS

Stock  Change    Bid 
 ---------------- 
 AXP   -1 7/16  101.31 
 CHV   -1 15/16 79.44 
 KO    -1 3/8   79.31 
 GPS   -1 7/8   59.13 
 EK    -1 7/8   67.94 
 XON   -  13/16 68.50 
 GM    -1 1/2   68.38 
 INTC  -1 1/2   66.94 
 MSFT  +  1/4   85.94 
 PFE   -1 1/2   108.00 
 TROW  -  1/2   33.38 
 
                  Day   Month    Year  History 
         C-K      -1.54%  -0.47%   5.27%   5.27% 
         S&P:     -1.99%  -1.27%   7.56%   7.56% 
         NASDAQ:  -1.67%  -3.55%   3.80%   3.80% 
  
 Cash-King Stocks 
  
     Rec'd    #  Security     In At       Now    Change 
     2/3/98   22 Pfizer        82.30    108.00    31.23% 
     5/1/98   37 Gap Inc.      51.09     59.13    15.73% 
    2/27/98   27 Coca-Cola     69.11     79.31    14.77% 
     2/3/98   24 Microsoft     78.27     85.94     9.80% 
     2/6/98   56 T. Rowe Pr    33.67     33.38    -0.89% 
    5/26/98   18 American E   104.07    101.31    -2.65% 
    2/13/98   22 Intel         84.67     66.94   -20.95% 
  
 Foolish Four Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Eastman Ko    63.15     67.94     7.59% 
    3/12/98   20 Exxon         64.34     68.50     6.47% 
    3/12/98   15 Chevron       83.34     79.44    -4.69% 
    3/12/98   17 General Mo    72.41     68.38    -5.57% 
  
  
 Cash-King Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
     2/3/98   22 Pfizer      1810.58   2376.00   $565.42 
     5/1/98   37 Gap Inc.    1890.33   2187.63   $297.30 
    2/27/98   27 Coca-Cola   1865.89   2141.44   $275.55 
     2/3/98   24 Microsoft   1878.45   2062.50   $184.05 
     2/6/98   56 T. Rowe Pr  1885.70   1869.00   -$16.70 
    5/26/98   18 American E  1873.20   1823.63   -$49.58 
    2/13/98   22 Intel       1862.83   1472.63  -$390.21 
  
 Foolish Four Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Eastman Ko  1262.95   1358.75    $95.80 
    3/12/98   20 Exxon       1286.70   1370.00    $83.30 
    3/12/98   15 Chevron     1250.14   1191.56   -$58.58 
    3/12/98   17 General Mo  1230.89   1162.38   -$68.52 
  
                               CASH   $2037.63 
                              TOTAL  $21053.13 
   
 *The year for the S&P and Nasdaq will be as of 02/03/98