The Deen's List(TM)
A service of Deen Capital Management, Inc. (www.deencapital.com)
Vol.1 #84           Monday December 15 2003           2:09pm ET

Please read carefully our disclaimers at the end of this newsletter.

Market stance: BULLISH (since Dec 12 2003)

******************** Bought Headwaters Inc. (HDWR) *********************

Net buy price in managed accounts(*)... $20.29
Yesterday's close (Dec 12)............. $19.35
Net change (based on net buy price).... +$0.94
Today's volume as of 1:24pm ET ........ 441,233 ($9.0 million)
Average daily volume................... 416,600 ($8.5 million)
This year's earnings-per-share......... $1.55 (est)
Next year's earnings-per-share......... $1.83 (est)
P/E using next year's earnings......... 11.1 (est)
Earnings growth rate, next 5 years..... 23.0% 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 HDWR.  Headwaters Inc. (www.hdwtrs.com)
markets technology for recycling the waste by-products from coal,
steel and other industries into fuel sources.

I just sold this stock back on Dec 9 due to technical considerations.

Here's why I getting back into this stock:

+ Breakout:  At the time I bought, mid-day on Mon Dec 15, the stock
was breaking out of a 6-month trading range.  Volume was running about
double the average.

+ Excellent recent sales growth:  Here are the quarterly year-to-year
sales growth rates from the last four quarters, in chronological order:
+382%, +241%, +233%, and, most recently, for the quarter ended Sep 30,
+144% to $106.5 million.

+ Excellent recent earnings-per-share growth:  Here are the quarterly
EPS figures for the last eight quarters:
Dec 02 vs Dec 01: 29c vs 19c
Mar 03 vs Mar 02: 24c vs 21c
Jun 03 vs Jun 02: 37c vs 26c
Sep 03 vs Sep 02: 40c vs 28c

+ Strong (though not rising) estimates:  According to recent data from
First Call, the consensus earnings estimate for FY 04 (Sep) is $1.55,
down from $1.58 90 days ago; and the consensus estimate for FY 05 is
$1.83 (the 90-days-ago estimate is not available).

+ Valuation:  At 11 times next year's estimated earnings and a
projected 5-year annualized earnings growth rate of 23%, the stock is
very attractively priced.

+ History of earnings surprises:  This company has reported earnings
ahead of estimates in each of the past four quarters.

+ The company's industry group ("Energy - Other") has risen in relative
strength over the past six months, according to Investor's Business
Daily.

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************************ 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.