The Motley Fool Discussion Boards

Previous Page

Investors' Roundtable / Rule Maker Companies

URL:  https://boards.fool.com/rule-makers-a-rare-breed-indeed-12282905.aspx

Subject:  Rule Makers - A Rare Breed Indeed Date:  3/26/2000  11:45 PM
Author:  sditto Number:  5847 of 8329

In an earlier post at http://boards.fool.com/Message.asp?id=1030043001867000&sort=id 
I tried to identify some of the industries where Rule
Maker companies might be found.  

This weekend I took a harder look and searched some
financial databases to see how many companies actually
met the Rule Maker financial requirements (without
even considering the qualitative requirements).  Rule
Makers are a rare breed indeed.  

Only 40 companies in 23 industries meet the minimum
Rule Maker requirements of Sales > $1B, Market Cap
>$5B, Gross Margin > 50%, and Net Margin > 7%

When you apply the last three Rule Maker criteria of
Cash/Debt Ratio > 1.5, Flow Ratio < 1.25, and Cash King
Margin > 10% only seven companies in five industries
qualify - Adobe, Amgen, Cisco, Intel, Microsoft,
Novell, and Schering-Plough.

The industry/company statistics and the list of 40
companies meeting the minimum Rule Maker financial
criteria are listed below:

                                Industries   Companies
Minimum financial requirements  23           40
Cash/Debt Ratio > 1.5           12           20
Flow Ratio < 1.25               14           22
Cash King Margin > 10           12           16
Meet at least 1 Fool criterion	20	     33
Meet at least 2 Fool criterion	12	     18
Meet all 3 Fool criterion       5            7

Symbol Company      Industry Name	       Criteria
ADBE * Adobe	    Application Software       C/D,F,CK
BMCS   BMC Software Application Software       F
CPWR   Compuware    Application Software	
MSFT * Microsoft    Application Software       C/D,F,CK
NOVL * Novell       Application Software       C/D,F,CK
ORCL   Oracle       Application Software       C/D,F
AMGN * Amgen        Biotechnology              C/D,F,CK
AUD    ADP          Business Software/Services C/D,F
RX     IMS Health   Business Software/Services F,CK
COX    Cox          CATV Systems	       F
TLAB   Tellabs      Communication Equipment    C/D,CK
EMC    EMC          Data Storage Devices       C/D,CK
BMY    Bristol-Myer Drug Manufacturers-Major   C/D,CK
JNJ    J&J          Drug Manufacturers-Major   C/D,CK
MRK    Merck        Drug Manufacturers-Major   F
PFE    Pfizer       Drug Manufacturers-Major	
SGP  * Schering-Plo Drug Manufacturers-Major   C/D,F,CK
WLA    Warner-Lambe Drug Manufacturers-Major   F
ABX    Barrick      Gold                       F,CK
VRI    Vastar       Independent Oil & Gas      F,CK
AOL    AOL          Internet Information       C/D,F
TIF    Tiffany      Jewelry Stores	
WCOM   MCI WorldCom Long Distance Carriers     F
MDT    Medtronic    Medical Appliances	
BSX    Boston Sci   Medical Instruments        CK
GDT    Guidant      Medical Instruments	
CSCO * Cisco        Networking Devices	       C/D,F,CK
NN     Newbridge    Networking Devices
LUV    Southwest    Regional Airlines          F
PEB    PE Biosystem Scientific Instruments	
INTC * Intel        Semiconductor-Broad Line   C/D,F,CK
TXN    Texas Instru Semiconductor-Broad Line   C/D
ADI    Analog Devic Semiconductor-Special      C/D
AMAT   Applied Mat  Semiconductor Equipment    C/D
KLAC   KLA-Tencor   Semiconductor Equipment    C/D
TER    Teradyne     Semiconductor Equipment    C/D
AT     ALLTEL       Telecom Services-Domestic  F
CTE    Century Tel  Telecom Services-Domestic  F
GUC    Gucci        Textile - Apparel          C/D,CK
USM    US Cellular  Wireless Communications    F

Legend:
* - Meets all financial criteria to be a Rule Maker
C/D - Meets Cash/Debt Ratio criteria
F - Meets Flow Ratio criteria
CK - Meets Cash King Margin criteria

Note:
This analysis is based on financial information
obtained from Microsoft Money Central and Market Guide
web sites and may not contain the latest or most
accurate data available.  Additionally, I've not had
anyone check my work to verify accuracy.  Any and all
comments are welcome.

Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us