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 WESCO International Inc. (WCC)
* 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, October 31, 2005, I bought WCC, first for client accounts, then for my personal accounts. WESCO International, Inc. distributes electrical products and other industrial maintenance, repair, and operating supplies. The Company also provides integrated supply services. WESCO operates branches and distribution centers in the United States, Canada, Puerto Rico, Guam, Mexico, the United Kingdom, and Singapore, which serve customers worldwide. Here's why I bought this stock: + News: A week and a half ago, on Thu Oct 20, before the open, the company announced results for the third quarter ended Sep 30. Operating earnings came in at 63c per diluted share (vs 43c last year and First Call 55c). Revenue was up 16% to $1.13 billion (First Call $1.08 billion). + Breakout: The stock broke out of an 8-month consolidation pattern on that day, Oct 20, on very heavy volume, more than 5x average. Note that we were able to buy today at a price at or very near the high on that breakout date. + Solid recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +16%, +17%, +14%, and, most recently, as cited above, +16%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: 38c vs 21c Mar 05 vs Mar 04: 36c vs 23c Jun 05 vs Jun 04: 56c vs 44c Sep 05 vs Sep 04: 63c vs 43c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2005 is $2.15, revised upward from $1.97 90 days ago (and up from 2004 actual earnings of $1.47); and the consensus estimate for 2006 is $2.83, revised upward from $2.38 90 days ago. + Valuation: At 14 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 3c ahead of estimates in each of the past five quarters (including the just-reported quarter cited above, which was 8c ahead). + The company's industry group ("Electronics - Parts Distributors") is ranked #26 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 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||