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. Bought Olympic Steel Inc. (ZEUS)
* 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 ZEUS, first for client accounts, then for my personal accounts. Olympic Steel purchases flat-rolled steel typically from steel producers and responds to its customers' needs by processing steel to customer specifications and by providing critical inventory and just-in-time delivery services. They have 12 facilities in 8 states. Here's why I bought this stock: + Technical: Back on Nov 30, this stock broke out of a 4-month trading range, closing at $27, a new 8-year high, on extremely heavy volume. Since then, the price has mostly been falling back on lighter volume, with support at its rising 20-day moving average. The stock did retreat back into its pre-Nov-30 trading range, but is now less than a point away from the top end of that range. The stock is now poised, in my opinion, to make a second breakout attempt. + 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: +16%, +63%, +96%, and, most recently, for the quarter ended Sep 30, +111% to $244.1 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: ($0.22) vs ($0.11) Mar 04 vs Mar 03: $1.09 vs ($0.05) Jun 04 vs Jun 03: $1.82 vs ($0.06) Sep 04 vs Sep 03: $1.80 vs ($0.01) + Rising estimates for 2004: According to recent data from First Call, the consensus earnings estimate for 2004 is $5.85, up from $5.75 90 days ago; and the consensus estimate for 2005 is $4.65, unchanged from 90 days ago. + Valuation: At 5 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 10%, the stock is attractively priced. (No recent earnings surprise data was available.) + The company's industry group ("Metal Processing & Fabrication") is ranked #16 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: - Next year's First Call consensus earnings estimate of $4.65 is less than this year's consensus of $5.85. -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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||