Fool Portfolio Report
Wednesday, June 25, 1997
by David Gardner (MotleyFool)
ALEXANDRIA, VA, (June 25, 1997) -- During a day of market decline, the Fool Portfolio repeated that trick, splitting the difference between the losses of its two competing indices. The S&P 500 gave away 0.82%. The Nasdaq surrendered 0.43%. The Fool was drained of 0.62% of its value, due to declines in its three biggest dollar holdings (Iomega, America Online, and General Motors, respectively).
There was little news of any real consequence today, as is sometimes the case. Thus, at one reader's recent request, I wanted to take the time to update you on coming earnings announcements for Fool stocks, including the expected reporting date and the current consensus estimate vs. the comparable quarter last year. Here's the tally:
Stock Report Date Estimate DJT wk/July 14th $0.01 vs. ($2.06) GM July 16th $2.54 vs. $2.63 T wk/July 17th $0.58 vs. $0.94 LU wk/July 18th $0.25 vs. N/A IOM wk/July 18th $0.19 vs. $0.11 CHV wk/July 22nd $1.03 vs. $1.34 3M wk/July 29th $1.03 vs. $0.91 AOL wk/Aug 1st $0.07 vs. $0.14 KLAC wk/Aug 8th $0.47 vs. $0.61 ATCT wk/Aug 28th $0.03 vs. $0.12 COMS wk/Sept24th $0.53 vs. $0.52
Looking over the list, I'm initially struck by the lower comparable numbers for the Dow stocks. You have Chevron supposed to come in 30 cents lower, pretty much the same for AT&T, and GM down a smidgen. Only 3M currently shows a nice-looking comparison, though if Lucent had been independent at this time last year, you'd probably see a nice expected rise there, too.
Going beyond that list, you don't see much else that looks particularly good, either. But the interesting thing is that several of these companies have had great bounceback performances in their stock, probably because each has a negative comparison for an unusual reason. Look 'em over:
AMERICA ONLINE (NYSE:AOL), with its transitioning business model, is expected to be profitable but lower. Not really apples to apples for that one, though. The company's accounting practices have changed, it now offers a flat-rate pricing model, and it's focusing much of its future business on non-subscription revenues. AOL became profitable a quarter ahead of Wall Street's expectations, and has recently doubled.
KLA TENCOR (Nasdaq:KLAC), in the midst of its cyclical business pattern, shows lower numbers. That can be somewhat deceiving too, of course, since that the stock has doubled in recent months as well -- all part, again, of that cyclical semiconductor biz. Strong company, newly merged with Tencor.
3COM (Nasdaq:COMS), following a decent quarter just reported to close out fiscal '97, looks pretty flat too. This stock has ALSO bounced back about 100% from its spring lows. Further, its estimates do not currently account for a fully integrated U.S. Robotics, which will be the case as it reports its next quarter.
Finally, ATC COMMUNICATIONS (Nasdaq:ATCT) sports a negative comparison, although it's in the midst of turning itself around (we hope) following a collapse in its growth rate, a change in management, and a loss of 80% of its equity value -- most of that felt acutely by us and our portfolio! We'll watch that late August report with interest.
Best-looking report? IOMEGA (NYSE:IOM)... currently estimated for 19 cents per share, vs. 11 cents in the three months last summer. Very nice. What a long-term keeper.
Hardest to predict report? Has to be TRUMP HOTELS & CASINO RESORTS (NYSE:DJT). The company is so leveraged (i.e. huge debt vs. low market cap) that a change in its operations can throw its numbers off wildly one way or the other. Donald is batting first, in terms of chronology of reporting. We'll have a full Foolish look in three weeks, when the company announces.
Earnings are a key part of the Foolish investment paradigm, and it's helpful for all of us as individual investor to keep track of the dates, expectations, and past performance. I urge you to consider keeping a similar list to the one above for your own stocks. Make it a simple word processing file, to be called up at a click of the button anytime. Such is the ease of investing on one's own today... so much is just a button-click away.
Including the Fool's new buy report.
A note on the new Fool Port purchase, which is INNOVEX, INC (Nasdaq: INVX). The company is a disk drive related small cap. Of late, the disk drive companies have been getting hurt as the summer has seen slower orders. Most expect that this is a temporary slow-down, but the stocks have already paid the price. Already leaders like Seagate and Gateway have announced slower quarters to come. Innovex did last week, as well.
After the bell today another disk drive company announced lower than anticipated results for the coming quarter. KOMAG (Nasdaq: KMAG) stated that orders from SEAGATE (NYSE: SEG) -- which accounted for 30% of quarterly sales in the recent past -- were now down to 15% of sales in the current quarter and not rising as expected. Seagate recently announced a slow-down and the need to cut back on orders for now. This was written of in tonight's Evening News (link below).
Innovex's earnings estimates were already lowered last week as a result of Seagate's woes. However, this may further spook investors about an industry slow-down. That would be fine. We wouldn't mind seeing Innovex come down in price further before we buy it. The entire sector has been bashed over the past many weeks now that nearly all the big players have announced slower quarters. Stocks move on expectations, though. If things begin to look better for down the road, the stocks in the industry will begin to move up eventually, probably even as they announce weaker numbers next quarter.
Also, some of the slow-down in the industry is product or company specific. Innovex, supplying a needed part to all types of disk drives -- though not at all invulnerable -- does have more of a cushion than others in the industry.
Either way, we like the company, management, and numbers, and we're investing for at least the next few years, as long as Innovex continues to dominate its industry. That's all in the buy report, of course.
--- David Gardner, June 25, 1997
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Stock Change Bid ---------------- AOL - 5/8 57.50 T + 1/16 37.00 ATCT + 1/16 5.25 CHV - 7/16 73.81 DJT --- 10.13 GM - 3/4 56.00 IOM - 1/8 21.00 KLAC - 3/16 50.31 LU + 7/16 72.63 MMM + 1/4 101.25 COMS -1 7/16 48.31Day Month Year History FOOL -0.62% 5.53% 8.25% 188.90% S&P: -0.82% 4.80% 20.01% 93.93% NASDAQ: -0.43% 3.28% 12.02% 100.82% Rec'd # Security In At Now Change 5/17/95 980 Iomega Cor 2.52 21.00 733.33% 8/5/94 355 AmOnline 7.27 57.50 690.92% 8/12/96 110 Minn M&M 65.68 101.25 54.16% 10/1/96 42 LucentTech 47.62 72.63 52.52% 8/11/95 125 Chevron 50.28 73.81 46.79% 8/24/95 130 KLA Tencor 44.71 50.31 12.53% 8/12/96 280 Gen'l Moto 51.97 56.00 7.75% 8/13/96 250 3Com Corp. 46.86 48.31 3.10% 8/12/96 130 AT&T 39.58 37.00 -6.51% 4/30/97 -1170 *Trump* 8.47 10.13 -19.56% 10/22/96 600 ATC Comm. 22.94 5.25 -77.11% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 20412.50 $17830.63 5/17/95 980 Iomega Cor 2594.53 20580.00 $17985.47 8/12/96 110 Minn M&M 7224.44 11137.50 $3913.06 8/11/95 125 Chevron 6285.61 9226.56 $2940.95 8/12/96 280 Gen'l Moto 14552.49 15680.00 $1127.51 10/1/96 42 LucentTech 1999.88 3050.25 $1050.37 8/24/95 130 KLA Tencor 5812.49 6540.63 $728.14 8/13/96 250 3Com Corp. 11714.99 12078.13 $363.14 8/12/96 130 AT&T 5145.11 4810.00 -$335.11 4/30/97 -1170*Trump* -9908.50 -11846.25 -$1937.75 10/22/96 600 ATC Comm. 13761.50 3150.00-$10611.50 CASH $49631.21 TOTAL $144450.52