The Deen's List(TM) A service of Deen Capital Management, Inc. (www.deencapital.com) Vol.1 #83 Monday December 15 2003 12:06pm ET Please read carefully our disclaimers at the end of this newsletter. Market stance: BULLISH (since Dec 12 2003) ******************************* Contents ******************************* Bought LEXR Bought MOVI ******************** Bought Lexar Media Inc. (LEXR) ******************** Net buy price in managed accounts(*)... $17.29 Yesterday's close (Dec 12)............. $16.29 Net change (based on net buy price).... +$1.00 Today's volume as of 9:39am ET ........ 1.1 million ($19.6 million) Average daily volume................... 3.6 million ($61.5 million) This year's earnings-per-share......... $0.43 (est) Next year's earnings-per-share......... $0.66 (est) P/E using next year's earnings......... 26.3 (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 Dec 15, I bought LEXR. Lexar Media (www.lexarmedia.com) makes flash memory cards and media storage solutions for the digital photography market. Here's why I bought this stock: + News: On Mon Dec 15 before the open, the company announced the introduction of the miniSD(TM) card, with shipments beginning immediately in Japan. The miniSD occupies some 60% less space in a host device than the company's standard SecureDigital (SD) card. + A "true surprise"(*): Prior to the news, the stock was trading near a 4-month low. Then the stock gapped up at the open on the day of the news. (*) "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: +199%, +90%, +140%, and, most recently, for the quarter ended Sep 30, +116% to $98.7 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 02 vs Dec 01: 8c vs (5c) Mar 03 vs Mar 02: 6c vs (8c) Jun 03 vs Jun 02: 9c vs 2c Sep 03 vs Sep 02: 12c vs 4c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2003 is 43c, up from 36c 90 days ago; and the consensus estimate for 2004 is 66c, up from 48c 90 days ago. + Valuation: At 26 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 30%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 2c ahead of estimates in three of the past four quarters. ******************* Bought Movie Gallery Inc. (MOVI) ******************* Net buy price in managed accounts(*)... $18.24 Yesterday's close (Dec 12)............. $18.02 Net change (based on net buy price).... +$0.22 Today's volume as of 9:39am ET ........ 9,004 ($0.2 million) Average daily volume................... 413,700 ($7.5 million) This year's earnings-per-share......... $1.56 (est) Next year's earnings-per-share......... $1.78 (est) P/E using next year's earnings......... 10.3 (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 Mon Dec 15, I bought MOVI. Movie Gallery Inc. (www.moviegallery.com) is a video specialty retailer primarily focused on rural and secondary markets. Here's why I bought this stock: + Technical: This stock is in a long-term uptrend, but, shorter term, the stock has fallen from $22.44 on Oct 13 to $17.15 on Dec 9. A heavy volume selling climax on Dec 2 may signal that the stock is ready to resume its long-term uptrend. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +41%, +37%, +31%, and, most recently, for the quarter ended Sep 30, +28% to $167.2 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 02 vs Dec 01: 41c vs 36c Mar 03 vs Mar 02: 46c vs 35c Jun 03 vs Jun 02: 33c vs 27c Sep 03 vs Sep 02: 30c vs 28c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2003 is $1.56, up from $1.53 90 days ago; and the consensus estimate for 2004 is $1.78, up from $1.74 90 days ago. + Valuation: At 10 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least a penny ahead of estimates in three 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.