Please read carefully our disclaimers at the end of this newsletter. Market Stance: BEARISH (since October 7, 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 Citrix Systems Inc. (CTXS)
* 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, October 20, 2005, I bought CTXS, first for client accounts, then for my personal accounts. Citrix Systems, Inc. provides access infrastructure software and services designed to simplify the complexity of Information Technology environments. The Citrix Metaframe Access Suite products provide clients with easy, secure and instant access to managed applications without regard to location, network connection, or type of client hardware platform. This stock is a component of the S&P 500 and the NASDAQ 100. Here's why I bought this stock: + I'm still bearish, but my indicators are improving, and there are tentative signs that the market bottomed out earlier this week. I am increasing our exposure to stocks with this buy, but managed accounts are still conservatively postured, mostly in cash, and less volatile, statistically, than the S&P 500. In other words, I'm still bearish, but moving towards neutral. + News: Yesterday, after the close, the company announced results for the quarter ended Sep 30. Earnings came in at 29c per diluted share (vs 29c last year and First Call 25c). Revenue was up 21% to $226.9 million (First Call $219.9 million). + A "true surprise"*: For the two weeks prior to the news, the stock was mostly lower. Then, this morning, the stock is soaring on heavy volume. As I write this, at about 1:15 PM EDT, volume is already almost three times the daily average. * "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 an exceptionally long two-year trading range. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +36%, +25%, +18%, and, most recently, as cited above, +21%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: 29c vs 22c Mar 05 vs Mar 04: 25c vs 19c Jun 05 vs Jun 04: 27c vs 20c Sep 05 vs Sep 04: 29c vs 24c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2005 is $1.04, revised upward from $1.01 90 days ago (and up from 2004 actual earnings of 93c); and the consensus estimate for 2006 is $1.18, revised upward from $1.17 90 days ago. + The 2005 estimate cited above of $1.04 is trumped by the company's new guidance, issued in their earnings press release yesterday, of $1.10 to $1.12 (adjusted earnings-per-share). + Valuation: At 22 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 12.5%, the stock is moderately priced. + History of earnings surprises: This company has reported earnings at least a penny ahead of estimates in each of the past five quarters (including the just-reported quarter cited above, which was 4c ahead). + The company's industry group ("Computer Software - Enterprise") is ranked #22 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, October 20, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||