Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since September 6, 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. Bought Petrohawk Energy Corp. (HAWK)
* The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. Today, Monday, September 19, 2005, I bought HAWK, first for client accounts, then for my personal accounts. Petrohawk Energy Corp. is an oil and gas company. The Company participates in the exploration and production of natural gas and crude oil. Petrohawk's operations are currently focused in proven oil and gas producing trends primarily in South Texas, Louisiana, and Central California. Here's why I bought this stock: + Breakout: The stock has recently broken out of a five-and-a-half month trading range. + Huge spike in buying volume: On Friday, the stock soared 9% on 8.6 million shares, about 15 times the daily average. + Explosive recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +70%, +440%, +698%, and, most recently, for the quarter ended June 30, +625% to $36.2 million. + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2005 is 78c, revised upward from 64c 90 days ago (and up from 2004 actual earnings of 36c); and the consensus estimate for 2006 is $1.03, revised upward from 80c 90 days ago. + Valuation: At 13 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 16%, the stock is attractively priced. + The company's industry group ("Oil & Gas - U.S. Exploration & Production"") is ranked #4 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 company announced last week that its facilities in the Gulf Coast region were not materially damaged by Hurricane Katrina. + 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 factors: - Spotty recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Sep 04 vs Sep 03: (5c) vs 5c Dec 04 vs Dec 03: 26c vs 4c Mar 05 vs Mar 04: 9c vs 14c Jun 05 vs Jun 04: (6c) vs (16c) - History of negative earnings surprises: For the past two quarters, the company has missed its numbers. -KD, September 19, 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||