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 Aleris International Inc. (ARS)
* 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 20, 2004, I bought ARS, first for client accounts, then for my personal accounts. Aleris International Inc., formerly IMCO Recycling Inc., recycles aluminum and zinc, with total processing capacity of approximately 4.1 billion pounds as of December 31, 2003. Its manufacturing and distribution network consists of 26 production plants of which 21 are located in the United States, two in Germany and one each in Brazil, Mexico and Wales. Here's why I bought this stock: + Technical: There was a heavy-volume breakout back on Nov 19 from a 5-month trading range. The stock closed at $14.89 that day, and continued to climb, up to a closing peak of $16.51 on Dec 2. From then until yesterday, the stock price has been retreating. Today, we have a heavy-volume bounce off of support at $14. In my view, this selloff likely ended yesterday, and provides a good entry point. We bought at a price slightly under that breakout-day (Nov 19) close. + 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: +42%, +43%, +22%, and, most recently, for the quarter ended Sep 30, +29% to $283.0 million. + Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: (8c) vs 10c Mar 04 vs Mar 03: 18c vs 9c Jun 04 vs Jun 03: 17c vs 17c Sep 04 vs Sep 03: 11c vs (5c) + Rising estimates for 2005: According to recent data from First Call, the consensus earnings estimate for 2004 is 46c, down from 56c 90 days ago; and the consensus estimate for 2005 is $1.69, up from $1.35 90 days ago. + Huge earnings growth projected: From 15c actual in 2003 to 46c estimated in 2004 to $1.69 estimated in 2005. That's +207% for 2004 and +267% for 2005. + Valuation: At 9 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 53%, the stock is very attractively priced. (No earnings-surprise data was available for the most recent two quarters.) + The company's industry group ("Metal Processing & Fabrication") is ranked #11 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. -KD, December 20, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||