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 Infocrossing Inc. (IFOX)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Tuesday, December 21, 2004, I bought IFOX, first for client accounts, then for my personal accounts. Infocrossing, Inc. offers IT outsourcing services, whereby it assumes responsibility for managing all or part of a client's information systems infrastructure and operations. Here's why I bought this stock: + Technical: This stock, which has been under heavy accumulation since they reported earnings on November 15, is recovering from a brief but steep selloff yesterday morning that brought the price down briefly to $16.50 (after closing at a multi-year high of $18.09 the day before). That this selloff immediately attracted bargain hunters is, in my view, a sign that the buyers are still very much in control. This stock may still have substantial upside. + Excellent and accelerating recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +8%, +16%, +81%, and, most recently, for the quarter ended Sep 30, +87% to $26.4 million. + Recent re-emergence into profitability after 4 years of losses. Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 8c vs (34c) Mar 04 vs Mar 03: 5c vs (40c) Jun 04 vs Jun 03: (1c) vs (45c) Sep 04 vs Sep 03: 10c vs (39c) + Strong estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is 40c, unchanged from 90 days ago; and the consensus estimate for 2005 is 86c, unchanged from 90 days ago. Note that the 2005 estimate is more than double the 2004 estimate. + Valuation: At 20 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 40%, the stock is very attractively priced. (Earnings surprise history data not available.) + The company's industry group ("Computer - Tech Services") is ranked #21 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 21, 2004 Bought Nextel Partners Inc. (NXTP)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Tuesday, December 21, 2004, I bought NXTP, first for client accounts, then for my personal accounts. Nextel Partners, Inc. provides integrated, wireless digital communications services using the Nextel brand name in mid-sized and rural markets throughout the United States. Here's why I bought this stock: + Technical: On Dec 9 and Dec 10, we had back-to-back big up days, up 7% and up 6%, respectively. Both days, especially December 10, were accompanied by extremely heavy volume. This was presumably in response to the Sprint/Nextel merger news. Since then, the stock has pulled back modestly. Those two spike days, in my view, signal just the beginning of new buying interest in this stock. I am buying at what I suspect may be the end of the post-news-spike dip. + Increased trading volume: Prior to Dec 9, average trading volume was about 1.8 million shares per day. From Dec 9 through Dec 20, daily volume has ranged from 2.7 million to 14.8 million. Most of this is buying volume. + 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: +51%, +47%, +42%, and, most recently, for the quarter ended Sep 30, +27% to $357.5 million. + Recent emergence into profitability after years of losses: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: (2c) vs (24c) Mar 04 vs Mar 03: 2c vs (20c) Jun 04 vs Jun 03: 9c vs (17c) Sep 04 vs Sep 03: 12c vs (6c) + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2004 is 36c, up from 32c 90 days ago; and the consensus estimate for 2005 is 74c, up from 72c 90 days ago. Note that the 2005 estimate is more than double the 2004 estimate. + Valuation: At 26 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 29%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least a penny ahead of estimates in each of the past four quarters. + The company's industry group ("Telecom - Wireless Services") is ranked #26 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 21, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||