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.
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Monday, November 8, 2004, I bought LFUS, first for client accounts, then for my personal accounts. Littelfuse, Inc. provides circuit protection products to the electronic, automotive and electrical industries. Here's why I bought this stock: + News: One week ago, on Mon Nov 1, before the open, the company announced results for the quarter ended Oct 2. Earnings came in at 49c per diluted share (vs 19c last year and First Call 43c). Revenue was up 44% to $135.9 million (First Call $133.0 million). + A "true surprise"*: Prior to the news, the stock was in a 4-month downtrend and was trading near an 8-month low. Then, in response to the news, on Mon Nov 1, the stock soared $6.30, or 19%, to $38.92. (We bought today at a slightly lower price.) * "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'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: +47%, +59%, +77%, and, most recently, as cited above, +44%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 28c vs 12c Mar 04 vs Mar 03: 43c vs 15c Jun 04 vs Jun 03: 46c vs 18c Sep 04 vs Sep 03: 49c vs 19c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is $1.80, up from $1.75 90 days ago; and the consensus estimate for 2005 is $2.02, up from $2.01 90 days ago. + Valuation: At 19 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 14%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 6c ahead of estimates in each of the past four quarters (including the just-reported quarter cited above). I chose to buy the stock in spite of the following negative factor: - The relative strength ranking of the company's industry group ("Electronics - Components / Connectors") has moved just slightly downward over the past six months, according to data from Investor's Business Daily. -KD, November 8, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||