The Deen's List(TM) A service of Deen Capital Management, Inc. (www.deencapital.com) Vol.1 #42 Wednesday October 29 2003 1:30pm ET Please read carefully our disclaimers at the end of this newsletter. Market stance: BULLISH (since Oct 3 2003) ******************************* Contents ******************************* Bought TRMB Sold SOHU ***************************** Bought TRMB ****************************** Trimble Navigation Ltd (TRMB) Net buy price in managed accounts(*)... $27.84 Yesterday's close (Oct 28)............. $21.38 Net change (based on net buy price).... +$6.46 Today's volume as of 1:05pm ET ........ 2.4 million ($66.7 million) Average daily volume................... 270,700 ($7.5 million) This year's earnings-per-share......... $1.24 (est) Next year's earnings-per-share......... $1.44 (est) P/E using next year's earnings......... 19.3 (est) Earnings growth rate, next 5 years..... 18.0% 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. Trimble Navigation (www.trimble.com) designs and manufactures satellite-based navigation and positioning systems used to determine exact geographical location. Here's why I bought this stock: + News: On Tue Oct 28 after the close, the company announced results for the quarter ended Sep 30. Operating earnings came in at 36c per diluted share (vs last year 16c and First Call 28c). Revenue was up 22% to $139.6 million (First Call estimate $140 million). + A "true surprise"(*): Prior to the news, the stock price had been falling. In fact, it closed at a 6-month low two days ago, Mon Oct 27. Then, this morning, it soared on huge volume. As of about 1:00PM ET today, Wed Oct 29, the stock was up $6.45 to $27.83 on volume of 2.4 million shares. That's huge volume for the first half of the trading day -- the daily average is about 271,000 shares. (*) "True surprise" is my term to describe a company news item that ignites heavy buying and that was not preceded by a short-term runup in the stock price (i.e. not preceded by rumor). + Three brokerage houses upgraded the stock this morning. + Near-Breakout: A close above $28.50 would represent a breakout from a long 34-month (almost 3-year) trading range. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +17%, +22%, +12%, and, most recently, as cited above, +22%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 02 vs Dec 01: 27c vs 2c Mar 03 vs Mar 02: 25c vs 6c Jun 03 vs Jun 02: 43c vs 24c Sep 03 vs Sep 02: 36c vs 16c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2003 is $1.24, up from $1.16 90 days ago; and the consensus estimate for 2004 is $1.44, up from $1.39 90 days ago. + Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 18%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 8c ahead of estimates in four of the past five quarters (including the just-reported quarter cited above). + The company's industry group ("Telecom - Wireless Equipment") has risen in relative strength over the past three months, according to Investor's Business Daily. It is now ranked #4 out of 197 groups. ****************************** Sold SOHU ******************************* Sohu.Com Inc (SOHU) Net sell price in managed accounts(*).... $35.23 Date(s) bought........................... Oct 27 2003 Net buy price in managed accounts(*)..... $38.25 Holding period........................... 0.3 weeks Gain/loss in managed accounts............ -7.9% (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. Sohu.com is down today in sympathy with Netease.com (NTES). Netease is down about 24% on the day as I write this on news that their revenue for computer-to-phone text messages and downloads fell 21% in the third quarter (vs the second quarter). Analysts are saying that Chinese regulators are clamping down on Web sites selling pornography. It is not clear how much, if at all, this affects Sohu.com, but my "Keep Losses Small" rule kicks in right about here. *********************** 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.