Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since August 18, 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 MarketWatch Inc. (MKTW)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Thursday, October 28, 2004, I bought MKTW, first for client accounts, then for my personal accounts. MarketWatch, Inc., formerly MarketWatch.com, Inc., is a multimedia publisher of business news and provider of information and analytical tools. It operates two websites, CBS.MarketWatch.com and BigCharts.com, where the Company makes available free-of-charge services, including news articles, feature columns, financial programming and analytic tools, such as stock quotes and charting. It also sells advertising on these websites to generate revenue. Here's why I bought this stock: + News: Yesterday, Wed Oct 27, before the open, the company announced results for the quarter ended Sep 30. Earnings came in at 4c per diluted share (vs last year 2c and First Call 0c). Revenue was up 71% to $19.8 million (First Call $19.65 million). + A "true surprise"*: For three weeks prior to the news, the stock was trending sideways to slightly lower. Then, yesterday, the stock soared $1.26, or 10%, to $13.71, on extremely heavy volume of 627,200 shares. (The daily average is only about 84,000.) * "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). + Near-Breakout: From $7.70 on Aug 11, the stock has climbed to $14 today. A close above $14.12 would be a breakout from a seven-month trading range. + Yesterday, the stock met my very stringent technical buy criteria, as outlined in my Research Update of June 25, 2004: http://www.deencapital.com/newslett/2004/040626.129.html#3 . + The stock's 200-day moving average is rising, indicating 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: +14%, +60%, +82%, and, most recently, as cited above, +71%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 13c vs 5c Mar 04 vs Mar 03: (1c) vs 0c Jun 04 vs Jun 03: 5c vs (1c) Sep 04 vs Sep 03: 4c vs 2c + Valuation: At 36 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 48%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 2c ahead of estimates in both of the past two quarters (including the just-reported quarter cited above, which was 4c ahead). + The company's industry group ("Internet Content") has risen in relative strength over the past six months, according to Investor's Business Daily, and now ranks #3 out of 197 groups. I chose to buy the stock in spite of the following negative factor: - Next year's consensus earnings estimate has come down slightly: According to recent data from First Call, the consensus earnings estimate for 2004 is 16c, up from 15c 90 days ago; and the consensus estimate for 2005 is 39c, down from 43c 90 days ago. However, even at 39c, that's still 144% year-over-year earnings-per-share growth. -KD, October 28, 2004
* Net buy prices shown are the total net purchase cost after commissions for all managed accounts divided by the total number of shares. ** Current prices are at least 20 minutes old. Welcome to The Deen's ListTM, an 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 strict 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||