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 United Therapeutics Corp. (UTHR)
* 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 29, 2004, I bought UTHR, first for client accounts, then for my personal accounts. United Therapeutics Corp. is a biotechnology company focused on the development and commercialization of therapeutic products to treat patients with chronic and life-threatening cardiovascular, infectious and oncological diseases. The Company's lead product is Remodulin. Here's why I bought this stock: + News: Last Wednesday, the company announced that it has received approval from the FDA for an intravenous version of its treatment for pulmonary arterial hypertension, or high blood pressure of the lungs. The company said this new form of the drug Remodulin is immediately available for commercial use. A "true surprise"*: For a week and a half prior to the news, the stock price was falling mildly. Then, on Wednesday, the stock price soared $6.21, or 17.6%, on extremely heavy volume of 5.9 million shares. That's more than 10x average daily volume, and a 4-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). + Last Wednesday, Nov 24, the stock met 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 . + The stock's 200-day moving average is rising, indicating a long-term uptrend. + Excellent and accelerating recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +13%, +27%, +31%, and, most recently, for the quarter ended Sep 30, +33% to $20 million. + The company has recently become profitable. Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: (15c) vs (12c) Mar 04 vs Mar 03: (9c) vs (14c) Jun 04 vs Jun 03: 18c vs (11c) Sep 04 vs Sep 03: 27c vs (6c) + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is 58c, up from 45c 90 days ago; and the consensus estimate for 2005 is $1.11, up from 93c 90 days ago. + Valuation: At 39 times next year's estimated earnings, you might think the stock is expensive. But then the company's exceptionally high projected 5-year earnings growth rate of 50% makes this P/E reasonable. + History of earnings surprises: This company has reported earnings at least 11c ahead of estimates in both of the past two quarters. I chose to buy the stock in spite of the following negative factor: - The company's industry group ("Medical - Biomed/Biotech") is ranked #175 out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily. It is up from its 5- 10- and 20-day moving averages, though down from its 40- and 60-day moving averages. -KD, November 29, 2004 Sold MicroStrategy Inc. (MSTR)
* The net buy (sell) price is the total net cost (proceeds) after commissions for all managed accounts divided by the total number of shares. I sold MSTR today primarily in order to raise cash so as to be able to buy UTHR, which I consider to be a particularly compelling buy. Also, looking at the stock's chart, there is a possible double-top forming. Also, this stock has been one of the weaker performers in our present portfolio. Also, this company's industry group ("Computer Software - Enterprise") has been falling in relative strength recently, according to data from Investor's Business Daily. -KD, November 29, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||