It is a big, black, 2,000-page binder that has offered up objective investment answers for decades. Right now, it's cautiously bullish about the stock market.
The Value Line Investment Survey, existing in various forms since 1935 and featuring its current stock rating system since 1965, grinds out investment reports and updates on 1,700 companies week-in and week-out. Besides being scrutinized by individual subscribers, its reports are a basic resource and second-opinion in investment research libraries nationwide.
The 10-year return of its recommended portfolio is 460 percent, which the Hulbert Financial Digest says ranks second among all investment publications. (This year Value Line's year-to-date results are down 8 percent.)
Right now, the publication and its team of 70 analysts give the probability of recession a 50-50 chance, and they're talking mild recession at that. While pointing out that many economic negatives could damage that prognosis, that's still more optimistic than a month ago.
"It's time to look at the market again, and we're a little more bullish than a few months ago, currently recommending that the investor keep 65 to 75 percent of his portfolio in stocks which we rank high in timeliness," said Rudy Carryl, executive director of research for the Value Line Investment Survey.
This $495-annual-subscription publication, updated weekly with new information that's clamped into that black binder, was previously recommending that 55 percent be put into stocks. "Given the current state of the economy, a lot of the stocks we're now recommending are inherently recession-resistant, namely the drug, medical services, food and environmental stocks," explained Carryl. "We're staying away from the stocks of banks, real estate, home appliances, automobile and steel firms."
A sister publication, Value Line OTC Special Situations, over the past 10 years is up 357 percent, ranking fourth among all investment publications. For 1990, it's up 6 percent.
For inclusion in the Value Line Investment Survey, a company's market capitalization must be at least $75 million and the stock must sell for $10 a share. It must have an 800,000 monthly trading volume, 1,000 shareholders, $50 million in sales and not have excessive insider ownership. There are always 100 stocks which receive Value Line's top "1" rating for investment timeliness. Another 300 receive a "2" rating. It's downhill from there.
Among the 100 stocks receiving its '1' rating for timeliness are Abbott Laboratories; Albertson's Inc.; American Brands; Amgen; Becton, Dickinson; Bell Industries; Biomet; Blockbuster Entertainment; CBI Industries; Cardinal Distribution; Chambers Development; Coca-Cola; ConAgra Inc.; Donaldson Co.; E-Systems; Fabri-Centers of America; Frontier Insurance Group; General Mills; Gerber Products; Gillette; Great Lakes Chemical; and Halliburton Co.
Others are International Flavors and Fragrances; Johnson & Johnson; Eli Lilly; Liz Claiborne; MAPCO Inc.; Medtronic Inc.; Merck & Co.; Microsoft Corp.; Oregon Steel Mills; PepsiCo Inc.; Quantum Corp.; Rubbermaid Inc.; St. Jude Medical; Schering-Plough; Schlumberger Ltd.; SciMed Life Systems; Stryker Corp.; Sun Microsystems; Sysco Corp.; Tyco Labs; UST Inc.; U.S. Healthcare; U.S. Surgical; Upjohn Co.; Valero Energy; VICORP Restaurants; Walgreen Co.; Wal-Mart Stores; Wendy's International; Wetterau Inc.; and Wyle Labs.