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 26, 2004, I bought DIOD, first for client accounts, then for my personal accounts. Diodes Inc. makes discrete semiconductors. Their products are used in a wide variety of electronic products, including TV set-top boxes, computers, cell phones, and car electronics. Their product line includes high-density diode and transistor arrays in ultra-miniature surface-mount packages, and the silicon wafers used in manufacturing these products. Here's why I bought this stock: + We recently sold this stock at a slight profit, purely on technical grounds. That was a good move, as the stock price proceeded to drop after we sold. I still find this stock very attractive for its growth characteristics and its low P/E. And now, I also think that the technical picture has improved significantly, and that the stock may be at a bottom We are buying back, by the way, at a price that is below both our recent Oct 19 buy price and our Nov 22 sell price. + Technical - Within the context of a long-term uptrend, a just completed (or so I suspect) short-term downtrend has brought the price down from $29.23 on Oct 29 to $24.60 Wednesday. Wednesday's session was what I call a "bullish reversal", and suggested to me the end of the short-term downtrend and the resumption of the long-term uptrend. Intraday Wednesday, the stock was down $1.18 before recovering almost all of that loss to close down only 11c. This reversal was accompanied by heavy volume. Volume set a 4-week record. This volume is remarkable given that Wednesday was the day before a holiday, and, as expected, overall market volume was light. A key point here is that the long-term uptrend is intact. The stock, even at this lower price, is still trading above its 200-day moving average, and that moving average is rising. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +37%, +41%, +41%, and, most recently, for the quarter ended Sep 30, +41% to $49.3 million. + Outstanding recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 23c vs 17c Mar 04 vs Mar 03: 32c vs 14c Jun 04 vs Jun 03: 40c vs 15c Sep 04 vs Sep 03: 47c vs 18c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is $1.64, up from $1.55 90 days ago; and the consensus estimate for 2005 is $1.87, up from $1.80 90 days ago. + Valuation: At 13 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 16%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least a penny ahead of estimates in each of the past four quarters (and 5c ahead for the most recently reported quarter ended Sep 30). + The company's industry group ("Semiconductor Mfg") is ranked #89 out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it is rising. -KD, November 26, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||