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 Dawson Geophysical Co (DWSN)
* 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 15, 2004, I bought DWSN, only for those accounts having sufficient cash to take on one more stock. (I did not buy for my personal accounts, due to insufficient cash.) Dawson Geophysical Co. acquires and processes two-dimensional (2-D), three-dimensional (3-D) and multi-component seismic data used in the exploration for, and development and field management of oil and natural gas reserves. Here's why I bought this stock: + Blowout earnings surprise: On Fri Nov 12 after the close, the company announced results for the quarter ended Sep 30. Earnings came in at 72c per diluted share (vs 10c last year and First Call 39c). Revenue was up 34% to $69.3 million (First Call consensus not available). + A "true surprise"*: Prior to the news, the stock had been trading near a 5-month low. Then, today, the stock is soaring 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). + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +36%, +7%, +52%, and, most recently, as cited above, +34%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 9c vs (16c) Mar 04 vs Mar 03: 36c vs 14c Jun 04 vs Jun 03: 35c vs (26c) Sep 04 vs Sep 03: 72c vs 10c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for the current fiscal year, ending Sep 2005, is $1.65, up from $1.19 90 days ago. (The consensus for FY 06 is not available.) + Valuation: At 14 times this 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 a penny ahead of estimates in each of the past five quarters (including 33c ahead (!) for the just-reported quarter cited above). + The company's industry group ("Oil&Gas - Field Services") ranks #20 out of 197 industry groups tracked by Investor's Business Daily for relative strength. This is down slightly from 1 month ago, 3 months ago, and 4 months ago, but up slightly from 2 months ago, 5 months ago, and 6 months ago. There's no obvious trend there, but it continues to be a strong group, as it has been for some time. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, November 15, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||