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, Wednesday, December 29, 2004, I bought AMXC, first for client accounts, then for my personal accounts. AMX Corp. is designs, developments, markets and distributes systems that control a variety of otherwise incompatible electronic devices and integrated systems. These systems simplify the automation and integration of audio/video, environmental and communications technologies through the combination of a processing platform and intrinsic user interface. AMX's systems provide control solutions in various industries, including broadcasting, education, entertainment, government, healthcare, hotels, houses of worship, network operations centers, presentation facilities, retail, residential applications, including home theater, home automation and private transportation. Here's why I bought this stock: + Yesterday, the stock had a dramatic day. I call it a "climactic selloff/rebound", or "bullish reversal". What happened is this: On Monday, the stock closed at $16.39. This was within pennies of setting a 4-month low. (The stock has been in a downtrend since peaking at $20.58 on Oct 26.) Then, yesterday, the stock sold off hard right after the opening bell. It bottomed out at $12.32 just a few minutes after that, and spent the rest of the day, and this morning, recovering from that huge drop. As of the time I bought, the stock had completely recovered back to Monday's close. Volume was very heavy yesterday, setting a 5-month record. This bullish reversal just might signal the end of that downtrend. + The stock's 200-day moving average is rising smartly, and has been throughout the shorter-term downtrend. In other words, the long-term trend is definitely up. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +5%, +15%, +32%, and, most recently, for the quarter ended Sep 30, +22% to $27.2 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 03 vs Dec 02: 12c vs 3c Mar 04 vs Mar 03: 16c vs 8c Jun 04 vs Jun 03: 29c vs 6c Sep 04 vs Sep 03: 33c vs 14c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for FY 05 (Mar) is $1.09, up from $1.02 90 days ago (and up from FY 04 actual earnings of 50c); and the consensus estimate for FY 06 is $1.13, up from $1.07 90 days ago. + Valuation: At 14 times next year's estimated earnings, the stock is attractively priced. (The 5-year projected earnings growth rate is unavailable.) + History of earnings surprises: This company has reported earnings at least 5c ahead of estimates in each of the past three quarters. + The company's industry group ("Computer Networking") is ranked #56 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 earnings estimate is only about 4% better than this year's. -KD, December 29, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||