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, Tuesday, December 28, 2004, I bought EZPW, first for client accounts, then for my personal accounts. EZCORP, Inc. operates pawnshops and payday loan stores in the United States. Here's why I bought this stock: + Breakout: This morning, Dec 28, the stock is breaking out an 8-month trading range to a 10-year high. Actually, the top of this trading range was also reached in 1997, meaning this really a 7-year trading range. Volume is extremely heavy. + The stock's 200-day moving average is rising, indicating a long-term uptrend. + Accelerating recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +2%, +10%, +9%, and, most recently, for the quarter ended Sep 30, +20% to $64.1 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 23c vs 18c Mar 04 vs Mar 03: 23c vs 12c Jun 04 vs Jun 03: 2c vs 1c Sep 04 vs Sep 03: 20c vs 12c + Strong and rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 05 (Sep) is 95c, up from 94c 90 days ago (and up from FY 04 actual earnings of 68c); and the consensus estimate for FY 06 is $1.38, up from $1.35 30 days ago (the 90-days-ago number is not available). + Valuation: At 11 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 25%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least 2c ahead of estimates in two of the past three quarters. + The company's industry group ("Retail - Misc / Diversified") is ranked #146 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This is a low ranking, but it has been generally rising recently. It's above its 5-, 10- and 20-day moving averages. -KD, December 28, 2004 Bought Lifecore Biomedical Inc. (LCBM)
* 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 28, 2004, I bought LCBM, first for client accounts, then for my personal accounts. Lifecore Biomedical, Inc. manufactures biomaterials and medical devices for use in various surgical markets. The company operates two divisions, the Hyaluronan Division and the Oral Restorative Division. Further information is available at their website. Here's why I bought this stock: + News: This morning, Dec 28, the company announced that it has renewed its supply agreement with Alcon, Inc., a global eye care company. According to the CEO, "Renewal of the agreement continues Lifecore's 20 year relationship with our largest customer and a leader in the ophthalmic market". + A "true surprise"*: For six weeks prior to the news, the stock was in a sideways trading pattern. Then, today, the stock was up sharply on heavy volume. * "True surprise" is my term to describe a company news item that ignites heavy buying and that was not preceded by a short-term run-up in the stock price (i.e. not preceded by rumor). + Breakout: The price movement today represents a breakout from a six-week trading range, and sets a new 2-year high for this stock. + 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: +13%, +6%, +14%, and, most recently, for the quarter ended Sep 30, +23% to $12.2 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 5c vs 2c Mar 04 vs Mar 03: 7c vs 7c Jun 04 vs Jun 03: 9c vs (4c) Sep 04 vs Sep 03: 10c vs (7c) + Strong estimates: According to recent data from First Call, the consensus earnings estimate for FY 05 (Jun) is 49c, up from 38c 90 days ago (and up from FY 04 actual earnings of 14c); and the consensus estimate for FY 06 is 64c, unchanged from 30 days ago (the 90-days-ago number is not available). + Valuation: At 18 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 40%, the stock is very attractively priced. + History of earnings surprises: This company has reported earnings at least 3c ahead of estimates in at least three of the past four quarters (data on one of the quarters is not available). + The company's industry group ("Medical Products") is ranked #122 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily. It is low, but it has been rising significantly over recent weeks and months. -KD, December 28, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||