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 Resources Connection, Inc. (RECN)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Thursday, December 23, 2004, I bought RECN, first for client accounts, then for my personal accounts. Resources Connection, Inc. is an international professional services firm. They provide professional consultants to clients on a project basis in several areas: accounting and finance, risk management and internal audit, information technology, human resources and supply chain management. Here's why I bought this stock: + News: Yesterday right at the closing bell, the company announced results for the quarter ended Nov 30. Earnings came in at 62c per diluted share (vs 19c last year and First Call 45c). Revenue was up 85% to $137.0 million (First Call $122.8 million). This was a huge surprise! + Breakout: There was a breakout attempt back on Dec 1, a breakout from a 6-month trading range into all-time high territory. That breakout lasted 3 days and then failed. Today we're seeing a second and much more convincing (due to much higher volume) breakout attempt. + 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: +78%, +81%, +94%, and, most recently, as cited above, +85%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Feb 04 vs Feb 03: 24c vs 12c May 04 vs May 03: 43c vs 18c Aug 04 vs Aug 03: 46c vs 15c Nov 04 vs Nov 03: 62c vs 19c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 05 (May) is $1.76, up from $1.41 90 days ago (and up from FY 04 actual earnings of $1.00); and the consensus estimate for FY 06 is $1.79, up from $1.66 90 days ago. + Valuation: At 29 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 25%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 5c ahead of estimates in each of the past four quarters (including the just-reported quarter cited above). + The company's industry group ("Commercial Services - Consulting") is ranked #95 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 23, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||