Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since May 25, 2004) Contents
Year-To-Date Performance
* An average of managed accounts, net after commissions and fees. Individual account results may vary. See also www.deencapital.com/perform.htm. For information on managed accounts, see www.deencapital.com/mgdaccts.htm. Bought Silicon Image Inc. (SIMG)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. On Fri Jun 25, I bought SIMG. Silicon Image Inc. (www.siimage.com) develops multi-gigabit semiconductor interfaces for the secure transmission, storage and display of digital media. Here's why I bought this stock: + News: On Thu Jun 24 after the close, the company raised its revenue guidance for the current quarter, which ends in a few days on June 30. The company said it expects 16% to 20% sequential revenue growth for this quarter, versus the company's prior guidance of 8% to 13%. Based on revenue of $35.858 million in the quarter ended March 31, this forecast translates into $41.6 to $43.0 million for the current quarter. That's well ahead of the First Call consensus estimate of $39.55 million. + A "true surprise"*: Prior to the news, the stock was trading toward the low end of its 5-month trading range. Then, on Friday morning, the stock was up sharply on very heavy 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 run-up in the stock price (i.e. not preceded by rumor). + The stock is in a 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: +26%, +13%, +27%, and, most recently, for the quarter ended Mar 31, +45% to $35.9 million. + Improving earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Jun 03 vs Jun 02: 1c vs (4c) Sep 03 vs Sep 02: (1c) vs (1c) Dec 03 vs Dec 02: 3c vs 1c Mar 04 vs Mar 03: 6c vs 1c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is 31c, up from 24c 90 days ago; and the consensus estimate for 2005 is 42c, up from 33c 90 days ago. + Valuation: At 29 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 32%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings that were a penny ahead of estimates in both of the past two quarters. I chose to buy the stock in spite of the following negative factor: - The company's industry group ("Semiconductor Mfg") has fallen in relative strength over the past three months, according to Investor's Business Daily. -KD, June 25, 2004
* Net buy prices shown are the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Welcome to The Deen's ListTM, 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. 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. All stocks discussed in The Deen's ListTM involve a high degree of risk. It should not be assumed that any stock discussed in The Deen's ListTM 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 Copyright © 2004 Deen Capital Management, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||