The Deen's List(TM) A service of Deen Capital Management, Inc. (www.deencapital.com) Vol.1 #68 Tuesday November 25 2003 10:47am ET Please read carefully our disclaimers at the end of this newsletter. Market stance: BULLISH (since Oct 3 2003) ******************************* Contents ******************************* Bought ATYT Bought SHRP ***************************** Bought ATYT ****************************** ATI Technologies Inc (ATYT) Net buy price in managed accounts(*)... $15.18 Yesterday's close (Nov 24)............. $14.92 Net change (based on net buy price).... +$0.26 Today's volume as of 4:00pm ET ........ 2,900 ($0.0 million) Average daily volume................... 2.8 million ($41.9 million) This year's earnings-per-share......... $0.50 (est) Next year's earnings-per-share......... $0.64 (est) P/E using next year's earnings......... 23.8 (est) Earnings growth rate, next 5 years..... 15.0% 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 Tue Nov 25, I bought ATYT. ATI Tech (www.ati.com) is a Canadian company that makes graphics components and multimedia hardware and software for personal computers. Here's why I bought this stock: + News: On Tue Nov 18, the company raised its forecasts for its first fiscal quarter, which ends Nov 30. The company now sees revenue of between $440 million and $470 million, up from a previous forecast of $400 to $430 million. They also project earnings per share of 16c to 20c, up from the previous forecast of "12c or slightly higher". + A "true surprise"(*): Prior to the news, the stock was trading at or near a two-and-a-half month low. Then, on Nov 18, the stock shot up 7.1% (98c) to $14.83, on heavy volume that was about 3x average. (*) "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). + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +29%, +18%, +34%, and, most recently, for the quarter ended Aug 31, +71% to $380.7 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Nov 02 vs Nov 01: 4c vs 4c Feb 03 vs Feb 02: 5c vs 7c May 03 vs May 02: 5c vs 8c Aug 03 vs Aug 02: 12c vs (1c) + Rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 04 (Aug) is 60c, up from 45c 90 days ago; and the consensus estimate for FY 05 is 73c, up from 55c 90 days ago. + Valuation: At 21 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 2c ahead of estimates in each of the past three quarters. ***************************** Bought SHRP ****************************** Sharper Image Corp (SHRP) Net buy price in managed accounts(*)... $30.83 Yesterday's close (Nov 24)............. $30.35 Net change (based on net buy price).... +$0.48 Today's volume as of 4:00pm ET ........ 4,800 ($0.1 million) Average daily volume................... 318,300 ($9.8 million) This year's earnings-per-share......... $1.56 (est) Next year's earnings-per-share......... $1.79 (est) P/E using next year's earnings......... 17.2 (est) Earnings growth rate, next 5 years..... 19.0% 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 Tue Nov 25, I bought SHRP. Sharper Image (www.sharperimage.com) is a specialty retailer and product developer. They operate 127 stores in 32 states and the District of Columbia. They also sell their catalog of wares over the Internet. Here's why I bought this stock: + News: On Fri Nov 21, the company raised its earnings guidance for the fiscal year ending Jan 31. They now expect $1.55 to $1.59 per share, versus previous guidance earlier this month of $1.45 to $1.50. This compares favorably with the First Call consensus of $1.50 and with last year's $1.21. They also said they expect revenue growth for the quarter to be in the 20% to 22% range. + Breakout: Back on Nov 12, the stock was up $2.28 to $31.98 on 4x average volume. This was a breakout from a 4-month trading range. We can still buy this stock on Nov 25, in my opinion, because the price has backed off from that Nov 12 level, yet remains above its previous trading range. The breakout has not failed. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +31%, +27%, +25%, and, most recently, for the quarter ended Oct 31, +24% to $131.1 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Jan 03 vs Jan 02: $1.26 vs 98c Apr 03 vs Apr 02: 5c vs 1c Jul 03 vs Jul 02: 5c vs (5c) Oct 03 vs Oct 02: 6c vs (4c) + Rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 04 (Jan) is $1.50, up from $1.41 90 days ago; and the consensus estimate for FY 05 is $1.73, up from $1.61 90 days ago. (See also "News" above.) + Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 19%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least a penny ahead of estimates in each of the past four quarters. *********************** 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.