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 Nanometrics Inc. (NANO)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Tuesday, November 2, 2004, I bought NANO, first for client accounts, then for my personal accounts. Nanometrics Inc. is designs, manufactures and markets high-performance process control metrology systems used in the manufacture of semiconductors/integrated circuits and flat panel displays. Here's why I bought this stock: + News: This morning, Tue Nov 2, before the open, the company announced results for the quarter ended Oct 2. Earnings came in at 20c per diluted share (vs last year's loss (25c) and First Call 14c). Revenue was up 100% to $20.2 million (First Call $17.65 million). + A "true surprise"*: Prior to the news, since putting in a minor peak on Oct 7 at $12.72, the stock has been slipping slightly lower. It closed yesterday at $11.93. Then, this morning, the stock is soaring on extremely heavy volume. Today's volume is on track to set at least a 19-year record. * "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). + Today, the stock is on track to easily meet and exceed my stringent technical buy criteria, as outlined in my Research Update of June 26, 2004: http://www.deencapital.com/newslett/2004/040626.129.html#3 . + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +28%, +46%, +67%, and, most recently, as cited above, +100%. + Recent emergence into profitability: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: (6c) vs (27c) Mar 04 vs Mar 03: (10c) vs (80c) Jun 04 vs Jun 03: 10c vs (34c) Sep 04 vs Sep 03: 20c vs (25c) + Strong and stable to rising estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is 34c, up from 22c 90 days ago; and the consensus estimate for 2005 is 99c, unchanged from 90 days ago. + Valuation: At 15 times next year's estimated earnings, the stock is very attractively priced. (The 5-year projected earnings growth rate was not available.) + History of earnings surprises: This company has reported earnings exactly 6c ahead of estimates in both of the two most recent quarters (this includes the just-reported quarter cited above). + The company's industry group ("Semiconductor Equipment") has risen in relative strength over the past six months, according to Investor's Business Daily. I chose to buy the stock in spite of the following negative factor: - The stock's 200-day moving average is falling, indicating a long-term downtrend. -KD, November 2, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||