Fool Portfolio Report
Wednesday, February 7, 1996

*** If the first leg of the Fool Book Tour didn't stop in your town, don't despair -- dry your eyes and get ready for the Virtual Book Signing on Monday at 11 PM EST. More details in coming days. ***

by Joe Hecht (MF Cubster)

Wham! Crash! Bif! Socko! Oh, sorry, let me turn this Batman rerun off so I can tell you a familiar story. The analysts that follow the semiconductor and semiconductor equipment manufacturing industry are at it again. Remember earlier in the winter when the dynamic analyst duo of Kurlak and Whittington said Dynamic Random Access Memory (DRAM) chip prices were coming down? Thus, they justified lower recommendations from buy to hold to sell for just about all the companies that have anything to do with chips short of Frito-Lay.

Well, if Batman and Robin can have more than one set of actors, then so can the analysts that don the caped crusader outfits. Today's devilish duo was Hambrecht & Quist and Montgomery Securities. Mark Fitzgerald of H & Q cut our Foolio stocks AMAT (from strong buy to hold) and KLAC (from buy to hold). He also took a chop at Lam Research (misery loves company). Monty's analyst also trimmed AMAT and KLAC (and Tencor) from buy to hold.

What does this mean to a Fool? Not much. We see that Applied Materials has a 26.6% 5-year growth rate estimate (from Zack's Analyst Watch) with a P/E nearly half that. KLAC's 5-year growth rate estimate is 25.4%. So you can see we at Fool Headquarters are looking well past these analysts efforts. There will be something more Foolish to report on for AMAT in a week. Their earnings will be announced next Tuesday, February 13th. Stay tuned for some news we do pay attention to.

If these were the only holdings in the Foolio, we would have been clobbered. As it turns out, we crushed the Dow Jones Industrials (up 0.60%), the S&P 500 (up 0.56%) and the Nasdaq (down 0.40%). Yes, the Fool Portfolio was up a remarkable 1.01% due to the Foolish notions of diversification: Beating the Dow and a hankering for some high flying small cap and former small cap stocks (thank you, AMER).

Lets start with our behemoth retailer Sears. You say the retail sector is in trouble. You say the economy is in the dumps. Well, Sears came out with earnings today of $1.13 per share, which was an all-time record for the company. They also reported that they achieved their first billion dollar sales week during December. Sales were strong all across the board, including clothing, home electronics and jewelry. Their automotive business had their best year ever selling 23 million tires. I've seen many a Fool kicking those Sears tires myself. Thanks to Mr. Martinez and the entire Sears crew.

Remember, we didn't have to do any research to make our decision to buy this company. Just look for the Dow Jones Industrial stocks that have high dividend yield and low price. You will find some gems in this group.

The Fool portfolio also has been blessed with great high flying companies like America Online. As you know from yesterday's report, AMER reported $0.10 EPS yesterday which was in line with analysts expectations. AMER is being watched closely for how many subscribers they have. You, dear reader, are among FIVE MILLION in this community. The Wall Street powers that be liked that number and just about everything else in the post-earnings conference call. Read MF Templar's take on this in the special AMER section found on the main Motley Fool screen.

Finally, Iomega, another Fool darling, was up a buck today. After a week of SCUD missiles from columnists and TV reporters, our buddies in Roy, Utah had no news. Just remember this: before Mr. Dorfman's bearish report on IOMG Monday, the stock price was $14 1/2. Today IOMG closed at a bid of $14 1/2! We Fools know that in the short run anything can happen, but it's fundamental information on a company that really is worth examining.

Will AMER's plot to take over the world succeed? Can AMAT and KLAC escape from the deadly downgrade machine? Is IOMG bound for glory? Are there some other sides to Sears we haven't yet seen? Tune in tomorrow! Same Fool time, same Fool channel!

Today's Moves

AMER +2 1/4
AMAT -4 1/4
CHV - 1/2
GE - 3/4
GPS - 3/4
KLAC -4 1/2
S +1 1/2

Today's Numbers

Day Month Year History FOOL +1.01% 4.02% 10.30% 105.96% S&P 500 +0.56% 2.19% 5.52% 41.78% NASDAQ -0.40% 2.36% 3.10% 50.62% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 49.50 580.61% 5/17/95 1005 Iomega Cor 5.04 14.50 187.82% 8/5/94 165 Sears 28.93 44.13 52.55% 4/20/95 155 The Gap 32.55 48.88 50.15% 8/11/95 95 GenElec 57.91 78.38 35.33% 8/11/95 110 Chevron 49.00 51.75 5.61% 1/29/96 250 Medicis Ph 27.86 27.00 -3.08% 8/24/95 100 AppldMatl 57.52 39.88 -30.68% 8/24/95 130 KLA Instrm 44.71 29.75 -33.46% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 33660.00 $28714.44 8/24/95 100 AppldMatl 5752.49 3987.50 -$1764.99 5/17/95 1005 Iomega Cor 5063.13 14572.50 $9509.37 4/20/95 155 The Gap 5045.25 7575.63 $2530.38 8/5/94 165 Sears 4772.65 7280.63 $2507.98 8/11/95 95 GenElec 5501.87 7445.63 $1943.76 8/11/95 110 Chevron 5389.99 5692.50 $302.51 1/29/96 250 Medicis Ph 6964.99 6750.00 -$214.99 8/24/95 130 KLA Instrm 5812.49 3867.50 -$1944.99 CASH $12147.13 TOTAL $102979.01