Touchstone Friday (Drip Port) August 21, 1998

Buyin' Campbell
...our next investment in the Soup guy
by Jeff Fischer ([email protected])

ALEXANDRIA, VA (Aug. 21, 1998) -- We'll send this month's $100 investment to Campbell Soup on Monday and, in fact, we might even send more than $100, because I've been thinking about the cash balance in our portfolio for more than a few months. We'll decide on Monday how much the Drip Port is sending and I'll explain the reasoning behind our decision then.

The past week was spent productively reviewing three of our five banking finalists (in fact, we actually touched on four of them).

On Monday, key figures for Mellon Bank (NYSE: MEL) were reviewed and we began to consider Fifth Third Bancorp (Nasdaq: FITB). On Tuesday, we covered the history of Fifth Third Bancorp as well as its current business -- it's a strong contender, but Mellon out-scored it for a few reasons, including its diversity, its valuation, and its higher return on equity.

On Wednesday, we went south to get the lowdown on the hoedown at First Tennessee (Nasdaq: FTEN). It wasn't much of a showdown. Although First Tennessee has one of the highest returns on equity and invested capital of our five contestants, it has been cash flow negative in achieving its returns, and it generally uses more leverage and is spending more money on its business in order to grow than we like to see. Dale still respects the company, and for good reason -- it's well run, without a doubt. But he likes Mellon and Norwest better, and I agree with Mellon (not having assessed Norwest yet).

On Thursday, we looked at the history behind U.S. Bancorp (NYSE: USB), another strong contender for our investment dollar. U.S. Bancorp is among the top-ten most valued bank holding companies on the market, and it's a highly profitable entity, as we'll review next week. Thursday we only covered its history (from 1920 to 1997). Dale provided great analysis of the company on July 24, and reading that before next week is recommended. U.S. Bancorp is currently my favorite alongside Mellon.

To end the week, stocks fell sharply Friday on world economy concerns related to the Russian and Asian economies, as usual. We have such a long-term outlook and so little money invested thus far that this doesn't really impact us -- except perhaps for the better.

Summer is flyin' and so am I. See you on the Drip message boards. Fool on,

Jeff

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

8/21 Close

 
 Stock    Close   Change 
 CPB   $52 1/8    -3/16 
 INTC  $84 15/16  -1 1/16 
 JNJ   $76 1/8    +5/8

 
           Day    Month    Year   History 
 Drip     (0.43%) (0.51%) 11.79%   (4.80%) 
 S&P 500  (0.95%) (3.52%) 11.42%   13.65%  
 Nasdaq   (1.95%) (4.05%) 14.41%   12.73%  
  
  
 Last Rec'd  Total #  Security  In At  Current 
  08/03/98    4.125     CPB    $54.395 $52.125 
  07/01/98    9.724     INTC   $80.239 $84.938 
  08/07/98    6.543     JNJ    $70.138 $76.125 
  
  
 Last Rec'd  Total #  Security  In At   Value    Change 
  08/03/98    4.125     CPB    $224.38 $215.02   ($9.36) 
  07/01/98    9.724     INTC   $780.21 $825.89   $45.68  
  08/07/98    6.543     JNJ    $458.92 $498.09   $39.17  
  
  
 Base:  $1800.00 
 Cash:   $286.03** 
 Total: $1825.02 
  
   
 
  
 The Drip Portfolio has been divided into 76.682 shares with an average purchase price of $23.474 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.  
  
 
  
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