Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since August 10, 2005)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, August 31, 2005, I bought TDW, first for client accounts, then for my personal accounts. Tidewater Inc. provides offshore supply vessels and marine support services to the offshore energy exploration, development, and production industry. The Company tows and anchor-handles mobile drilling rigs and equipment, transports supplies and personnel, and supports pipe laying and other offshore construction activities. This stock is a component of the S&P 400 MidCap Index. Here's why I bought this stock: + I'm still bearish, and still keeping our account volatility low -- less than the S&P 500. These two buys today do not change that. At the same time, however, I am at least one step close to turning bullish, as my stock picks are performing better. My Index which tracks this has moved from bearish to neutral, and the stocks we own are performing well overall. + Breakout: Today, the stock is breaking out of a 6-month trading range on heavy volume. Today's volume will set a 3-year record. + Excellent and accelerating recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +2%, +11%, +16%, and, most recently, for the quarter ended June 30, +22% to $192.2 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Sep 04 vs Sep 03: 29c vs 22c Dec 04 vs Dec 03: 34c vs 32c Mar 05 vs Mar 04: 36c vs 18c Jun 05 vs Jun 04: 50c vs 23c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 06 (Mar) is $2.37, revised upward from $2.20 90 days ago (and up from FY 05 actual earnings of $1.25); and the consensus estimate for FY 07 is $2.99, revised upward from $2.61 90 days ago. + Valuation: At 15 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 25.5%, 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 three quarters (including, most recently, 4c ahead for the quarter ended June 30). + The company's industry group ("Oil&Gas - Field Services") is ranked #13 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. + The stock's 200-day moving average is rising, indicating a long-term uptrend. -KD, August 31, 2005
* 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, August 31, 2005, I bought TIF, first for client accounts, then for my personal accounts. Tiffany & Co. is a jeweler and specialty retailer. The Company's sales are made through Tiffany & Co. stores and boutiques, and to select retailers and distributors in the Americas, the Asia-Pacific region, Europe, and the Middle East. Tiffany's direct marketing sales are made through its corporate and catalog divisions. This stock is a component of the S&P 500. Here's why I bought this stock: + I'm still bearish, and still keeping our account volatility low -- less than the S&P 500. These two buys today do not change that. At the same time, however, I am at least one step close to turning bullish, as my stock picks are performing better. My Index which tracks this has moved from bearish to neutral, and the stocks we own are performing well overall. + News: This morning, before the open, the company announced results for the quarter ended July 31. Earnings came in at 30c per diluted share (vs 22c last year and First Call 24c). Revenue was up 11% to $526.7 million (First Call $519.5 million). The company also raised its FY 06 earnings-per-share guidance. + A "true surprise"*: Yesterday, the stock closed at a seven-week low. Then, this morning, the stock is soaring on extremely 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: Today's price movement represents a breakout from a five-month trading range. + Today, the stock is on track to meet the stringent technical buy criteria outlined in my Research Update of June 26, 2004: http://www.deencapital.com/newslett/2004/040626.129.html#3 . + Solid recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +7%, +11%, +12%, and, most recently, as cited above, +11%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Oct 04 vs Oct 03: 12c vs 19c Jan 05 vs Jan 04: 81c vs 74c Apr 05 vs Apr 04: 26c vs 25c Jul 05 vs Jul 04: 30c vs 22c + Strong earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 06 (Jan) is $1.51, unchanged from 90 days ago (and up from FY 05 actual earnings of $1.39); and the consensus estimate for FY 07 is $1.70, unchanged from 90 days ago. + Valuation: At 22 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 13%, the stock is reasonably priced. + History of earnings surprises: Two quarters ago, earnings came in 3c ahead of estimates; now, we have a report that is 6c ahead. + The stock's 200-day moving average is rising, indicating a long-term uptrend. I chose to buy the stock in spite of the following negative factor - The company's industry group ("Retail/Wholesale - Jewelry") is ranked #187 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling over recent weeks and months. -KD, August 31, 2005
* 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 © 2005 Deen Capital Management, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||