Fool Portfolio Report
Thursday, October 19, 1995
Blue chips led the way today, as the Dow climbed more than 0.50% versus S&P gains of 0.54%, FOOL growth of 0.43%, and a slow day on the NAZ, up 0.18%. This is the sort of day we like to emphasize the efficacy of growth stock investing, the balanced portfolio, a long-term vision, and a dollop of Foolishness.
Consider that on a day that our second largest holding reported excellent third quarter earnings yet lost 5% of its value, we still stacked up nicely against the market. How come?
Let's start with The Gap (NYSE:GPS). Yesterday, GPS fell $1 3/8, or 3.7%. Then today it rose $1 5/8, or 4.5%. Yesterday we reported that The Gap fell on the opening of its first Old Navy store in Colorado, today we announce that it rose on Robertson Stephens & Co. analysts Janet Kloppenburg and Alexandra Dal Pan's raising of Gap Inc. (GPS) to ''buy'' from ''long-term attractive.'' Now there's a one-day turnaround. At $38 a share, The Gap is now up 16 3/4% for us. We fairly price the stock in the mid-$40s over the next six months, the timing of which depends on Christmas.
How about Iomega? A few nights ago we gathered with Emerald Research analysts Joe Besecker and Joe Garner, and now, two market days later, the stock has risen $1 3/4, or 8.6%. The full transcript of the Iomega Meeting in the Auditorium and back here at Fool Chat Central are available in our Hall of Portfolios area. Simply click Iomega in the listbox; you'll find the transcripts therein. Dare we say that there never has been as informational a real-time gathering on Iomega as this Monday past? We dare. FYI for IOMG investors and transcript readers, we're falling more in line with MF Chiros estimates for 1996 than those listed in First Call and Zacks.
America Online was up $5/8 in its quest to sweep past annual highs of $74 1/2. We've said it before, this one just keeps going and going. Numbers to be issued tomorrow by the Information & Interactive Services Report (IISR) will officially name America Online the largest online service on the planet. And growth over the past six months certainly hasn't disappointed. AOL has signed up 800,000 new accounts since last June; ah, those slow summer months!
The IIS report also asserts that an average of more than 14,000 Americans a day went online with a new service in the third quarter. And officially, as of September 30, 9.9 million Americans were online subscribers. Fools pause on these numbers and wonder how much stronger the portfolios of individual investors across that spectrum would be had they all heard of our operation. Forgive the transgression but if you have friends online who haven't toured our Foolish offerings here, are they not missing something--- invested as many of them are in mutual funds, that neatly underperforming industry? Turn your friends Foolish.
Now what about Ride Inc. and their 3rd quarter earnings report? Well, by midnight tonight, I'll have completed an evaluation of their numbers, and the report will sit both in the RIDE stock folder, as well as behind the Ride Inc. listbox entry on the Hall of Portfolios screen.
Today, RIDE announced earnings of 33 cents (6 cents above estimates) on phenomenal growth: 180% sales and 200% earning growth, quarter-over-quarter. On top of monstrous market share and sales growth, Ride Inc. busily added to the bottom-line, boosting profit margins from 10.4% to 11.2%. So why, you ask, did RIDE fall $1 1/8 to $21 7/8? A couple of reasons:
1) Trading activity is always furious around earnings time. For the record, we don't think that the quality of "ferocity" does a particularly good job of valuing stocks;
2) Ride did take from their 4th quarter sales and load them into the 3rd quarter.
The second point is possibly what's troubling Wall Street, and we're notably unconcerned about this issue. The addition of 5150 and Thermal Snowboards, both of which outperformed expectations, both of which will now contribute fully in the 4th quarter, both of which offer higher margins than Ride and CAS, and both of which are highly respected in the industry, should help offset some sales and earnings stacking in the third quarter. Likewise, let's be certain we're clear on what RIDE has done here. They've knocked out some business responsibilities before they're due. Promptness attracts more business.
Let's close with two Dow heavies, Sears and General Electric, which climbed more than a percent today (S up $3/8, GE up $1). Sears announced third quarter sales, earnings, and EPS of $8.4 billion, $288 million, and $0.56 per share, beating estimates by a penny. Hey, how many $40 billion companies see their stock climb by 50% in less than ten months? Not many, and we're glad to be holding one of 'em.
General Electric has also been Foolish, smashing today to not simply an annual high, but an all-time high of $65 1/8 on the bid. This Company has never been worth this much before. The stock is up 12.5% for us since August; we're looking for another 10-15% from here.
Foolishness is touching up close to 70% historical returns once again. Apparently we're forming some sort of support level here. Apparently.
- Tom Gardner, 10/19/95
AMER + 5/8 AMAT - 1/4 CHV --- GE +1 GPS +1 5/8 IOMG +1 KLAC --- RIDE -1 1/8 S + 3/8 SNIC ---
Day Month Year History FOOL +0.43% -0.45% 51.47% 68.17% S&P 500 +0.54% 1.07% 28.61% 28.85% NASDAQ +0.18% 0.33% 39.23% 45.38% Rec'd # Security In At Now Change 8/5/94 340 AmOnline 14.55 66.38 356.32% 5/23/95 510 Ride Inc. 9.91 21.88 120.81% 5/17/95 335 Iomega Corp 15.11 21.88 44.74% 8/5/94 165 Sears 28.93 35.25 21.87% 4/20/95 155 The Gap 32.55 38.00 16.74% 8/11/95 95 GenElec 57.91 65.13 12.45% 8/11/95 110 Chevron 49.00 47.63 -2.81% 8/24/95 130 KLA Instrm 44.71 42.75 -4.39% 8/24/95 100 AppldMatl 57.52 49.75 -13.52% 12/23/94 340 SonicSol 14.48 10.00 -30.95% Rec'd # Security Cost Value Change 8/5/94 340 AmOnline 4945.56 22567.50 $17621.94 5/23/95 510 Ride Inc. 5052.44 11156.25 $6103.81 5/17/95 335 Iomega Corp 5063.13 7328.13 $2265.00 8/5/94 165 Sears 4772.65 5816.25 $1043.60 4/20/95 155 The Gap 5045.25 5890.00 $844.75 8/11/95 95 GenElec 5501.87 6186.88 $685.01 8/11/95 110 Chevron 5389.99 5238.75 -$151.24 8/24/95130 KLA Instrm 5812.49 5557.50 -$254.99 8/24/95 100 AppldMatl 5752.49 4975.00 -$777.49 12/23/94 340 SonicSol 4924.18 3400.00 -$1524.18 CASH $5969.86 TOTAL $84086.11