Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since September 23, 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, Thursday, September 29, 2005, I bought NX, first for client accounts, then for my personal accounts. Quanex Corp. manufactures specialized metal products made from carbon and alloy steel and aluminum. The Company emphasizes proprietary and customized products, including engineered steel bars, aluminum flat-rolled products, and formed-metal products. Quanex serves the transportation, capital equipment, home building and remodeling, defense, and other commercial markets. This stock is a component of the IBD 100, the IBD 85-85, and the S&P 600 SmallCap indices. ("IBD" = "Investor's Business Daily") Here's why I bought this stock: + I'm still bearish, but less so. My indicators are improving, and, the way things are going, I may return to a bullish stance as early as tomorrow. Deen Capital clients are having a very good day today, a very good week, a very good month, and a very good quarter. + Breakout: Today, the stock is breaking out of a seven-month trading range into all-time high territory. Volume is more than four times average. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +72%, +87%, +43%, and, most recently, for the quarter ended July 31, +24% to $498.8 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Sep 04 vs Sep 03: $0.78 vs $0.52 Dec 04 vs Dec 03: $1.31 vs $0.27 Mar 05 vs Mar 04: $1.95 vs $0.43 Jun 05 vs Jun 04: $1.71 vs $0.82 + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for FY 05 is $6.32, revised upward from $6.18 90 days ago (and up from FY 04 actual earnings of $2.30); and the consensus estimate for FY 06 is $5.39, revised upward from $4.95 90 days ago. + Valuation: At 12 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 2c ahead of estimates in each of the past four quarters, including the most recently reported quarter ended July 31, which was 9c ahead. + The company's industry group ("Metal Proc & Fabrication") is ranked #85 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. I chose to buy the stock in spite of the following negative factor: - Next year's earnings estimate, $5.39, is less than this year's earnings estimate, $6.32. -KD, September 29, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||