Drip Portfolio Report
Friday, May 1, 1998
by Jeff Fischer (JeffF@fool.com)


ALEXANDRIA, VA (May 1, 1998) -- For the first day of May, we added $100 cash to our humble Drip Portfolio, and we also bought more shares of Intel. We'll buy more Johnson & Johnson on May 7, next Thursday, so root the stock down!

Stock and Portfolio Update

Intel (Nasdaq: INTC) rose Friday in the midst of news regarding a deal with Eastman Kodak (NYSE: EK), though whether or not Kodak actually had anything to do with Intel's rise, we can't know for certain. From the Fool Lunchtime News, the details follow:

"Film and camera manufacturer Eastman Kodak (NYSE: EK) climbed $1 3/16 to $73 3/8 this morning after announcing a series of agreements with semiconductor firm Intel Corp. (Nasdaq: INTC) relating to digital photography, including a joint development effort, a patent cross-licensing arrangement, and a joint marketing agreement to promote products resulting from the collaboration."

Next up, as reported last week, we received our Campbell Soup (NYSE: CPB) Drip account form already, meaning that we're ready to roll. We'll decide in the next few weeks how our monthly $100 will be invested for June. I'm currently entertaining the thought of sending all $100 to Campbell to more quickly even out our positions. (All of our stocks are equally attractive to me.) Campbell was upgraded to "outperform" on Friday by Salomon Smith Barney.

Our first share of Campbell was bought at $53.19, plus a $0.50 commission, making the total working cost $53.69. Add to that $15 if you bought the share through Temper of the Times (Moneypaper). So, for tax purposes (a few decades from now) we paid $68.69 for this share of Campbell.

We subtracted the $15 fee from the portfolio's cash and that is indicated in today's numbers (it crushed us a little). As well, we added the share of Campbell to the account, so we now officially hold three stocks after 9 months.

Campbell Soup is trading at 23.2 times the 1999 earnings estimate (the fiscal year ends in July of that year). Intel is trading at 21.3 times its 1999 earnings estimate (which is a pretty big guess at this point). And Johnson & Johnson is trading at 23.2 times its 1999 estimate. So, all three are actually in line with the S&P 500's valuation -- and all three are top shelf companies. If the stocks come down further, better for us at this early stage. And if they appreciate, well, they're now at reasonable prices from which to appreciate given a bull market. They'd have to soar before we might feel that we were throwing money somewhere that didn't represent decent value even in the intermediate term.

The Past Week. Dale continues to roll through his steps towards evaluating banks. A more thorough Fool I've hardly seen, and so I give thanks. (Nice rhyme.) As he goes forward he's beginning to grow leaner in background information, so soon we'll be looking more closely at companies.

On Monday Dale further discussed return on equity, with important distinctions about the evaluation process when looking at financial companies. Tuesday Dale introduced one of the future banks to be evaluated. Regions Financial Corp. (Nasdaq: RGBK) was initially reviewed. On Wednesday U.S Bancorp was introduced as another stock for study. Finally, on Thursday Dale shared the valuation parameters that he uses in analyzing banks, primarily discussing average equity to average assets and average assets to average equity (tangible), as well as making important points about asset turnover. Too often we focus on margins, which, though important, can be much less significant if a company has very high asset turnover, as does Home Depot (NYSE: HD) and American Express (NYSE: AXP).

Dale will return on Monday to continue his discussion.

If you have questions about Drip investing or Drip companies, please visit the message boards, which are linked in the top right of this page and are very active. Your questions are usually answered within a few hours by a helpful Fool -- one of thousands out there. Also, the Portfolio Information link in the top right of this page has background information on Drip investing.

Have a great and Foolish weekend!

--Jeff Fischer

FoolWatch -- It's what's going on at the Fool today.


TODAY'S NUMBERS

Stock Close Change CPB $52 + 11/16 INTC $81 1/8 +1 5/16 JNJ $70 3/16 -1 5/16
Day Month Year History Drip 0.36% 0.36% 8.85% (7.30%) S&P 500 0.83% 0.83% 15.52% 17.84% Nasdaq 0.27% 0.27% 19.30% 17.54% Last Rec'd Total # Security In At Current 04/13/98 1.000 CPB $53.690 $52.000 04/01/98 9.015 INTC $80.417 $82.125 04/07/98 4.099 JNJ $68.952 $70.188 Last Rec'd Total# Security In At Value Change 04/13/98 1.000 CPB $53.69 $52.00 ($1.69) 04/01/98 9.015 INTC $724.94 $740.34 $15.40 04/07/98 4.099 JNJ $282.64 $287.70 $5.06 Base: $1485.00 Cash: $371.10** Total: $1451.13

The Drip Portfolio has been divided into 62.618 shares with an average purchase price of $23.715 per share.

The portfolio began with $500 on July 28, 1997, adds $100 on the 1st of every month, and the goal is to have $150,000 in stock by August of the year 2017.

**Transactions in progress:

04/22/98: Sent $30 to buy more INTC.
04/22/98: Sent $70 to buy more JNJ.