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 Comtech Telecomm. Corp. (CMTL)
* 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, September 22, 2005, I bought CMTL, first for client accounts, then for my personal accounts. Comtech Telecommunications Corp. designs, develops, and manufactures technology electronic products and systems. The Company's communications products are used worldwide for voice, data, facsimile, and video transmissions at microwave frequencies in satellite, over-the-horizon microwave, terrestrial line-of-sight, and wireless telecommunications. This stock is a member of the IBD 100 Index. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + News: This morning, before the open, the company announced results for the quarter ended July 31. Earnings came in at 42c per diluted share (vs 25c last year and First Call 34c). Revenue was up 66% to $98.3 million (First Call $83.0 million). + A "true surprise"*: For a week or so prior to the news, the stock price was edging generally lower. Then, today, the stock is soaring on very 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 four-month trading range. + Excellent and accelerating recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +0%, +38%, +47%, and, most recently, as cited above, +66% to $98.3 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Oct 04 vs Sep 03: 31c vs 25c Jan 05 vs Dec 04: 39c vs 23c Apr 05 vs Mar 04: 32c vs 20c Jul 05 vs Jun 04: 42c vs 27c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 06 (Jul) is $1.50, revised upward from $1.46 90 days ago (and up from FY 05 actual earnings of $1.42); and the consensus estimate for FY 07 is $1.72 (90 days ago number not available). + Valuation: At 24 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least 8c ahead of estimates in each of the past five quarters (including the just-reported quarter cited above). + The company's industry group ("Telecommunications - Wireless Equipment") is ranked #58 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily. It has been up and down, but perhaps it's fair to say generally rising, over recent weeks and months. + 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: - I am reluctant to buy anything today, as I am on the verge of turning bearish. But this one is unusually compelling. -KD, September 22, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||