Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since December 15, 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, Wednesday, December 15, 2004, I bought MALL, first for client accounts, then for my personal accounts. PC Mall, Inc. is a direct marketer of computer hardware, software, peripheral, electronics and other consumer products. Further details are available at their website. Here's why I bought this stock: + Technical: Within the context of a still very much intact long-term uptrend, the stock price has dropped from $25.17 on Nov 29 to $21.35 yesterday. I suspect we are at or very near the end of this correction, and that the long-term uptrend will soon re-assert itself. + Dramatic increase in trading volume, mostly on the buy side. Prior to Nov 1, average daily volume was about 74,000 shares. From Nov 1 through yesterday, Dec 14, average volume has been about 376,000, a five-fold jump. Over that time, Nov 1 to Dec 14, the stock price has climbed from $15.43 to $21.35. + The stock's 200-day moving average is rising, indicating a long-term uptrend. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +23%, +18%, +24%, and, most recently, for the quarter ended Sep 30, +22% to $283.3 million. + Very strong estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is 42c, down from 43c 90 days ago; and the consensus estimate for 2005 is 74c, up from 68c 90 days ago. That's a 76% jump over the 2004 estimate. + Valuation: At 29 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 52%, the stock is attractively priced. + The company's industry group ("Retail/Wholesale - Computer / Cell") is ranked #42 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally rising over recent weeks and months. I chose to buy the stock in spite of the following negative factor: - Recent earnings-per-share growth is good, though mixed: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 9c vs 5c Mar 04 vs Mar 03: 1c vs 3c Jun 04 vs Jun 03: 8c vs 9c Sep 04 vs Sep 03: 9c vs 6c - History of earnings surprises: The company's most recent quarterly earnings of 9c was a penny shy of estimates. The real earnings story here lies in the current quarter, next year, and beyond. For the current quarter ending Dec 31, for example, the company is expected to report 25c a share, versus 9c a year ago. And for the Mar 31 quarter, the consensus is 9c versus 1c. The long-term projected earnings growth rate is also exceptionally high at 52%. -KD, December 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||