The Deen's List(TM) A service of Deen Capital Management, Inc. (www.deencapital.com) Vol.1 #67 Monday November 24 2003 3:57pm ET Please read carefully our disclaimers at the end of this newsletter. Market stance: BULLISH (since Oct 3 2003) ******************************* Contents ******************************* Bought CAMD Bought CYD Bought DAKT Bought QLTI Bought RE ***************************** Bought CAMD ****************************** California Micro Devices (CAMD) Net buy price in managed accounts(*)... $8.38 Yesterday's close (Nov 21)............. $7.60 Net change (based on net buy price).... +$0.78 Today's volume as of 1:35pm ET ........ 224,093 ($1.9 million) Average daily volume................... 364,600 ($3.1 million) This year's earnings-per-share......... $0.04 (est) Next year's earnings-per-share......... $0.25 (est) P/E using next year's earnings......... 34.8 (est) Earnings growth rate, next 5 years..... 30.0% 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. On Mon Nov 24, I bought CAMD. California Micro Devices (www.calmicro.com) designs and sells application-specific analog semiconductor products. Here's why I bought this stock: + The stock is having a good day today (Mon Nov 24), after trading near the low end of a 2-month trading range. If the long-term uptrend remains intact, this may be a good entry point. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +61%, +32%, +27%, and, most recently, for the quarter ended Sep 30, +38% to $14.9 million. + The company is re-emerging into profitability after two years of losses. Here are the earnings-per-share figures for the last eight quarters: Dec 02 vs Dec 01: (1c) vs (78c) Mar 03 vs Mar 02: (15c) vs (44c) Jun 03 vs Jun 02: 8c vs (18c) Sep 03 vs Sep 02: 4c vs (9c) + Rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 04 (Mar) is 4c, up from (12c) 90 days ago; and the consensus estimate for FY 05 is 25c, up from 20c 90 days ago. + Valuation: At 34 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 30%, the stock is moderately priced. 34 times next year's earnings is a modest multiple for a company that is just emerging into (or returning to) the realm of profitability. + History of earnings surprises: This company has reported earnings at least 2c ahead of estimates in each of the past two quarters. + The company's industry group ("Elec-Semiconductor Mfg") is a market- leading group. It is currently (as of Mon Nov 24) ranked 4th out of 197 groups for three-month price performance by Investor's Business Daily. ****************************** Bought CYD ****************************** China Yuchai International Ltd (CYD) Net buy price in managed accounts(*)... $28.15 Yesterday's close (Nov 21)............. $25.75 Net change (based on net buy price).... +$2.40 Today's volume as of 1:31pm ET ........ 2.7 million ($75.6 million) Average daily volume................... 2.8 million ($78.1 million) This year's earnings-per-share......... $1.60 (est) Next year's earnings-per-share......... $2.10 (est) P/E using next year's earnings......... 13.5 (est) Earnings growth rate, next 5 years..... 30.0% 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. On Mon Nov 24, I bought CYD (again). China Yuchai (www.hlcorp.com.sg/cyi/) manufactures medium-duty diesel engines, diesel power generators, and diesel engine parts in China. Here's why I bought this stock: + After trading near a 5-week low, and after having corrected 29% from its Nov 7 peak, the stock may now be resuming its very strong long-term uptrend. I believe this may be a good entry point for this highly volatile stock. + Valuation: At 13 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 30%, the stock is very attractively priced. + See also Vol.1 #54, dated Nov 12 2003. I also bought CYD on that date, and my reasons still apply. ***************************** Bought DAKT ****************************** Daktronics Inc (DAKT) Net buy price in managed accounts(*)... $18.41 Yesterday's close (Nov 21)............. $17.95 Net change (based on net buy price).... +$0.46 Today's volume as of 1:36pm ET ........ 156,366 ($2.9 million) Average daily volume................... 55,500 ($1.0 million) This year's earnings-per-share......... $0.89 (est) Next year's earnings-per-share......... $1.03 (est) P/E using next year's earnings......... 17.9 (est) Earnings growth rate, next 5 years..... 22.5% 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. On Mon Nov 24, I bought DAKT. Daktronics (www.daktronics.com) make electronic scoreboards, computer-programmable displays, large screen video displays, and control systems. Here's why I bought this stock: + News: On Tue Nov 18 after the close, the company announced results for the quarter ended Nov 1. Earnings came in at 34c per diluted share (vs last year 21c and First Call 21c). Revenue was up 21.3% to $58.3 million (First Call estimate was not available.). + A "true surprise"(*): Prior to the news, the stock was trading near the low end of its 6-month trading range. Then, on Wed Nov 19, in response to the news, the stock popped 13.5% on huge volume -- well over 10 times its average daily trading volume. (*) "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). + Near-Breakout: The stock is close to breaking out of that 6-month trading range. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +24%, +31%, +11%, and, most recently, as cited above, +21%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Jan 03 vs Jan 02: 10c vs (2c) Apr 03 vs Apr 02: 17c vs 8c Jul 03 vs Jul 02: 22c vs 16c Oct 03 vs Oct 02: 34c vs 21c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 04 (Apr) is 89c, up from 72c 90 days ago; and the consensus estimate for FY 05 is $1.03, up from 88c 90 days ago. + Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 22.5%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least 4c ahead of estimates in each of the past four quarters (including the just-reported quarter cited above, which was 13c ahead). ***************************** Bought QLTI ****************************** Qlt Inc (QLTI) Net buy price in managed accounts(*)... $16.19 Yesterday's close (Nov 21)............. $15.94 Net change (based on net buy price).... +$0.25 Today's volume as of 1:35pm ET ........ 263,095 ($4.3 million) Average daily volume................... 1.1 million ($17.9 million) This year's earnings-per-share......... $0.66 (est) Next year's earnings-per-share......... $0.78 (est) P/E using next year's earnings......... 20.8 (est) Earnings growth rate, next 5 years..... 24.8% 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. On Mon Nov 24, I bought QLTI. QLT Inc. (www.qltinc.com) is a Canadian biopharmaceutical company. They develop products in the fields of ophthalmology and oncology. Here's why I bought this stock: + I like the chart pattern. There was a 9.8% jump in price back on Nov 17 on very heavy volume, but the stock has since given back most of that gain on light volume. The price is presently in the lower part of a tight 2-month trading range. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +19%, +37%, +43%, and, most recently, for the quarter ended Sep 30, +35% to $38.3 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 02 vs Dec 01: 10c vs 37c Mar 03 vs Mar 02: 17c vs 6c Jun 03 vs Jun 02: 16c vs 6c Sep 03 vs Sep 02: 19c vs 8c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2003 is 66c, up from 59c 90 days ago; and the consensus estimate for 2004 is 78c, up from 73c 90 days ago. + Valuation: At 21 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 24.8%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 5c ahead of estimates in each of the past four quarters. ****************************** Bought RE ******************************* Everest Re Group Ltd. (RE) Net buy price in managed accounts(*)... $80.36 Yesterday's close (Nov 21)............. $78.45 Net change (based on net buy price).... +$1.91 Today's volume as of 1:31pm ET ........ 195,600 ($15.7 million) Average daily volume................... 445,100 ($35.8 million) This year's earnings-per-share......... $8.33 (est) Next year's earnings-per-share......... $10.56 (est) P/E using next year's earnings......... 7.6 (est) Earnings growth rate, next 5 years..... 17.5% 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. On Tue Oct 21, I bought Everest Re (www.everestregroup.com). Everest Re is a holding company providing treaty and facultative reinsurance to property and casualty insurance companies. Here's why I bought this stock: + Please refer to Vol.1 #31 for the reasons why I previously bought this stock back on Tue Oct 21. That was the day of a high-volume breakout. Since then, the stock has been selling off on light-volume profit-taking. I am taking a gamble that today's rally, both in this stock and in the market generally, marks the resumption of a long-term uptrend that began in late 2002. The reasons why I bought back on Oct 21 still apply today. + Rising estimates: Here's what I wrote back on Oct 21: "According to recent data from First Call, the consensus earnings estimate for 2003 is $8.14, up from $8.02 90 days ago; and the consensus estimate for 2004 is $10.20, up from $9.81 90 days ago." That was then. Now, the 2003 and 2004 First Call projections are even higher, at $8.33 and $10.56, respectively. + Valuation: We bought at less than 8 times next year's earnings, and the projected 5-year annualized earnings growth rate is 17.5%. That makes this a very attractively priced stock. *********************** 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.