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, Friday, November 12, 2004, I bought NAVR, first for client accounts, then for my personal accounts. Navarre Corp. publishes and distributes a range of home entertainment and multimedia products, including personal computer software, audio and video titles and interactive games. Yes, I just sold this stock two days ago in anticipation of a probable sell signal at the close from my StockSell Program (Ver.13s). There was indeed a sell signal at the close. I now think that that sell signal was dead wrong. Indeed, I think today is likely to be an excellent entry point, even though we are paying a higher price. Here's why: + Today, the stock is attempting to break out of a three-and-a-half month trading range. A close above $16.37 would be a new all-time high, and we are pennies away from that mark and climbing as I write this. A breakout could easily attract a flood of new buying interest. More importantly, this stock meets most of my usual "ideal buy" criteria exceptionally well: + The company's most recent earnings report was outstanding. Specifically, earnings for the fiscal second quarter ended Sep 30 came in at 17c per diluted share, versus 8c a year ago and well above the First Call consensus of 11c. Revenue, at $146.2 million, was up 36% from a year ago, up 15% sequentially, well above the First Call consensus of $126.0 million, and an all-time record for the company. This is old news -- it was announced Oct 20 -- but the stock price has not advanced significantly since then. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +31%, +70%, +73%, and, just announced, as cited above, +36%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 21c vs 14c Mar 04 vs Mar 03: 12c vs 2c Jun 04 vs Jun 03: 16c vs 1c Sep 04 vs Sep 03: 17c vs 8c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 05 (Mar) is 83c, up from 73c 90 days ago; and the consensus estimate for FY 06 is $1.11, up from $1.03 90 days ago. + Valuation: At 14 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 25%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least 5c ahead of estimates in each of the past three quarters (including the just-reported quarter cited above). + The company's industry group ("Retail/Wholesale - Computer/Cell") now ranks #52 for relative strength out of 197 groups tracked by Investor's Business Daily. That ranking is down from #42 a month ago, but up from #70 a week ago, up from #93 two months ago, and up dramatically from #153 three months ago and #160 four months ago. In other words, the industry group's trend is up. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, November 12, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||