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 China Yuchai International Ltd. (CYD)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Thursday, December 2, 2004, I bought CYD, first for client accounts, then for my personal accounts. China Yuchai International Limited is a holding company that owns a 76.4% interest in Yuchai, a medium-duty diesel engine manufacturer in China that also produces diesel power generators and diesel engine parts. The company's 6105 and 6108 medium-duty engines are used in medium-duty trucks with a load capacity of five to seven tons. Here's why I bought this stock: + Breakout: Today, the stock is breaking out of a 4-month trading range on heavy volume. It is also now trading above its 200-day moving average for the first time since April. + Technical: Back on Nov 8, the stock had a big up day on extremely heavy volume, in response to good earnings news. On that day, 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 . + Technical: Since that big price/volume spike of Nov 8, the stock has been mostly edging slightly lower in price -- until today. It looks like today is the first good follow-through day. + Mostly excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +33%, +31%, -1%, and, most recently, for the quarter ended Sep 30, +57% to $175.7 million. + Mostly excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 41c vs 34c Mar 04 vs Mar 03: 66c vs 40c Jun 04 vs Jun 03: 34c vs 43c Sep 04 vs Sep 03: 35c vs 26c + Strong estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is $1.84, unchanged from 90 days ago; and the consensus estimate for 2005 is $2.26, unchanged from 90 days ago. + Valuation: At 8 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 20%, the stock is very attractively priced. + The company's industry group ("Trucks & Parts - Heavy Duty") is ranked #74 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily. It is below its 20-day moving average, but above its 40- and 60-day moving averages. + This is a play on the spectacular economic growth going on in China. I chose to buy the stock in spite of the following negative factor: - The stock's 200-day moving average is falling, indicating a long-term uptrend. On the other hand, the 50-day moving average is rising sharply, as the stock has rallied from $10.10 on Aug 13 to $17-and-change now. (Note: Earnings surprise history data was unavailable.) -KD, December 2, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||