The Deen's List(TM)
A service of Deen Capital Management, Inc. (www.deencapital.com)
Vol.1 #97           Monday, December 29, 2003           10:58am ET

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

Market stance: BULLISH (since Dec 12 2003)

******************* Bought Digital River Inc. (DRIV) *******************

Net buy price in managed accounts(*)... $22.86
Yesterday's close (Dec 26)............. $21.95
Net change (based on net buy price).... +$0.91
Today's volume as of 10:32am ET........ 267,739 ($6.1 million)
Average daily volume................... 828,200 ($18.9 million)
This year's earnings-per-share......... $0.64 (est)
Next year's earnings-per-share......... $0.86 (est)
P/E using next year's earnings......... 26.6 (est)
Earnings growth rate, next 5 years..... 25.0% 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 29, I bought DRIV.  Digital River (www.digitalriver.com)
provides e-commerce services to software publishers and online
retailers.

Here's why I bought this stock:

+ Technical:  This stock is in a short-term downtrend since mid-October,
but a long-term uptrend since May 2002.  The stock closed Fri Dec 26
at $21.83.  That price level is very close to the 50-day moving average,
very close to a 4-month low, and it is a level at which the stock has
found support earlier this month and last.  This morning [Mon Dec 29],
the stock is up sharply off of that support level.  This, combined with
the stock's exceptionally attractive growth/valuation profile (detailed
below) and the increasingly favorable market conditions for growth
stocks generally over the last couple of weeks -- a trend I expect to
spill over into January at least -- make this stock a buy in my opinion.

+ Excellent recent sales growth:  Here are the quarterly year-to-year
sales growth rates from the last four quarters, in chronological order:
+21%, +36%, +18%, and, most recently, for the quarter ended Sep 30,
+42% to $26.8 million.

+ Excellent recent earnings-per-share growth:  Here are the quarterly
EPS figures for the last eight quarters:

Dec 02 vs Dec 01: 15c vs 4c
Mar 03 vs Mar 02: 17c vs 2c
Jun 03 vs Jun 02: 13c vs 5c
Sep 03 vs Sep 02: 18c vs 5c

+ Rising estimates:  According to recent data from First Call, the
consensus earnings estimate for 2003 is 64c, up from 61c 90 days ago;
and the consensus estimate for 2004 is 86c, up from 81c 90 days ago.

+ Valuation:  At 27 times next year's estimated earnings and a projected
5-year annualized earnings growth rate of 25%, 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.

I chose to buy the stock in spite of the following negative factors:

- The company's industry group ("Internet - Network Solutions"),
though strong at #25 out of 197 groups, has fallen in relative strength
over the past three months, according to Investor's Business Daily.
It was #20 back then.

- The stock was up nicely at the time I bought, but volume was not
heavy.  I usually insist on heavy-volume buying before I buy.

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***************************** 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
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************************************************************************

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.