The Deen's List(TM) A service of Deen Capital Management, Inc. (www.deencapital.com) Vol.1 #32 Thursday October 23 2003 11:26am ET Please read carefully our disclaimers at the end of this newsletter. Market stance: BULLISH (since Oct 3 2003) ******************************* Contents ******************************* Bought KSWS Sold MOVI Sold QLGC Sold TSA ***************************** Bought KSWS ****************************** K-Swiss Inc Cl A (KSWS) Net buy price in managed accounts(*)... $42.84 Yesterday's close (Oct 22)............. $39.41 Net change (based on net buy price).... +$3.43 Today's volume as of 10:37am ET........ 383,139 ($16.4 million) Average daily volume................... 176,000 ($7.5 million) This year's earnings-per-share......... $2.29 (est) Next year's earnings-per-share......... $2.75 (est) P/E using next year's earnings......... 15.6 (est) Earnings growth rate, next 5 years..... 14.0% per year (est) (*) The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. K-Swiss (www.kswiss.com) designs and markets a growing array of athletic footwear. Here's why I bought this stock: + News: Today before the open, the company announced results for the quarter ended Sep 30. Earnings came in at 80c per diluted share (vs last year 42c and First Call 50c). Revenue was up 49% to $121.6 million (First Call estimate $103 million). This is a huge surprise! + Breakout: The price movement today represents the second breakout attempt from a three-month trading range. (The first attempt, in early September, failed.) + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +19%, +44%, +49%, and, just announced, +49%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 02 vs Dec 01: 25c vs 23c Mar 03 vs Mar 02: 72c vs 49c Jun 03 vs Jun 02: 67c vs 30c Sep 03 vs Sep 02: 80c vs 42c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2003 is $2.29, up from $2.20 90 days ago; and the consensus estimate for 2004 is $2.75, up from $2.51 90 days ago. + Valuation: At 16 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 14%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 2c ahead of estimates in four of the past five quarters (including the just-reported quarter cited above). The above items were so compelling that I chose to buy the stock in spite of the following negative factor: - The company's industry group ("Apparel - Shoes & Related Mfg") has fallen dramatically in relative strength over the past six months, according to Investor's Business Daily. ****************************** Sold MOVI ******************************* Movie Gallery Inc (MOVI) Net sell price in managed accounts(*).... $20.52 Date(s) bought........................... Oct 8 2003 Net buy price in managed accounts(*)..... $21.97 Holding period........................... 2.1 weeks Gain/loss in managed accounts............ -6.6% (after commissions) (*) The net buy (sell) price is the total net cost (proceeds) after commissions for all managed accounts divided by the total number of shares. I sold because of my rule: "Keep Losses Small". ****************************** Sold QLGC ******************************* Qlogic Corp (QLGC) Net sell price in managed accounts(*).... $51.98 Date(s) bought........................... Oct 16 2003 Net buy price in managed accounts(*)..... $54.23 Holding period........................... 1.0 weeks Gain/loss in managed accounts............ -4.2% (after commissions) (*) The net buy (sell) price is the total net cost (proceeds) after commissions for all managed accounts divided by the total number of shares. I sold because of my rule: "Keep Losses Small". ******************************* Sold TSA ******************************* Sports Authority Inc The (TSA) Net sell price in managed accounts(*).... $35.88 Date(s) bought........................... Oct 13 2003 Net buy price in managed accounts(*)..... $37.74 Holding period........................... 1.4 weeks Gain/loss in managed accounts............ -4.9% (after commissions) (*) The net buy (sell) price is the total net cost (proceeds) after commissions for all managed accounts divided by the total number of shares. I sold because of my rule: "Keep Losses Small". *********************** Subscription Information *********************** Welcome to The Deen's List(TM), a new e-mail stock newsletter from Deen Capital Management, Inc. My intention is to inform you as quickly as is practical regarding my stock market moves. When I buy or sell a stock, first I take care of client accounts, then I buy/sell for my personal account(s), and then, third, I send out this newsletter. Your feedback is welcome. Send e-mail to deenslist@deencapital.com. To subscribe or unsubscribe, include the word "subscribe" or "unsubscribe" in the Subject line. This newsletter is free to managed account clients. For a limited time, it is also free to all interested parties. **************************** Privacy Policy **************************** Your personal information, including your e-mail address, will be held in confidence by Deen Capital Management, Inc. We will not share it with or sell it to others. ************************ IMPORTANT DISCLAIMERS ************************* * All stocks discussed in The Deen's List(TM) involve a high degree of risk. It should not be assumed that any stock discussed in The Deen's List(TM) or purchased by Deen Capital Management, Inc. will be profitable. * Past performance is not necessarily indicative of future results. * The information contained herein has been compiled from sources deemed to be reliable; however, we are not responsible for its accuracy or completeness. ************************************************************************ Ken Deen Deen Capital Management, Inc. PO Box 30925 Santa Barbara, CA 93130 (805) 682-1870 deenslist@deencapital.com Copyright (C) 2003 Deen Capital Management, Inc.