Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since December 7, 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, Monday, December 13, 2004, I bought PLMO, first for client accounts, then for my personal accounts. palmOne, Inc. makes handheld computing and communications devices. They shipped over 26.4 million handheld devices worldwide during the fiscal year ended May 31, 2004. palmOne sells products under three sub-brands: the Zire, Tungsten and Treo. Here's why I bought this stock: + The odds that my bearish market call of last Tuesday was correct continue to slip (see my Market Commentary written yesterday) as the market continues to improve today. I'd say the odds are now less than 50/50. I'm not quite ready to turn bullish, but I am putting a toe in the water. + News: This morning, the company announced that Silicon Graphics has chosen the company's TreoTM 600 smartphones over competing products from Research In Motion for its North American field sales and service workforce. + News: Last Friday, a Merrill Lynch analyst came out with a bullish note on palmOne. The analyst expects Treo sales to triple in 2005 and then grow by another 42% in 2006. + Breakout: Today, the stock is breaking out to a new all-time high, a breakout from a four-and-a-half month trading range, on heavy volume. + 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: +5%, +23%, +23%, and, most recently, for the quarter ended Aug 31, +62% to $273.1 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Nov 03 vs Nov 02: 14c vs 29c Feb 04 vs Feb 03: 1c vs (85c) May 04 vs May 03: 32c vs (28c) Aug 04 vs Aug 03: 43c vs (48c) + Rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 05 (May0 is $1.76, up from $1.52 90 days ago; and the consensus estimate for FY 06 is $2.06, up from $1.96 90 days ago. + Valuation: At 21 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15.5%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 16c ahead of estimates in each of the past four quarters. + The company's industry group ("Computer Manufacturers") is exceptionally strong. It is now ranked #2 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been rising over recent weeks and months. -KD, December 13, 2004
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. | |||||||||||||||||||||||||||||||||||||||||||||||||||