Please read carefully our disclaimers at the end of this newsletter. Market Stance: BULLISH (since October 31, 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, Tuesday, November 1, 2005, I bought IVAC, first for client accounts, then for my personal accounts. Intevac, Inc. designs, manufactures, and sells complex capital equipment that is primarily used to manufacture data storage products and flat panel displays. The Company supplies electro-optical devices and sputtering systems used to manufacture thin-film disks for computer hard disk drives. Intevac also sells disk lubrication equipment and contact stop-start test equipment. Here's why I bought this stock: + News: Yesterday at the close, the company announced results for the quarter ended Oct 1. Earnings came in at 29c per diluted share (vs 7c last year and First Call 25c). Revenue was up 24% to $43.5 million (First Call $38.2 million). + A "true surprise"*: Prior to the news, since peaking in mid-August, the stock had been trending lower. Yesterday's close was within pennies of a 6-month low. Then, this morning, the stock is soaring on extremely heavy volume. At the time I decided to buy, about 15 minutes after the open, the stock was up more than 20% on about 4x daily 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). + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +-14, +65%, +71%, and, most recently, as cited above, +24%. + Two quarters of explosive earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: (15c) vs (4c) Mar 05 vs Mar 04: (19c) vs (18c) Jun 05 vs Jun 04: 19c vs 3c Sep 05 vs Sep 04: 29c vs 7c + Rising earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2005 is 62c, revised upward from 39c 90 days ago (and up from a loss of 22c in 2004); and the consensus estimate for 2006 is 84c, revised upward from 65c 90 days ago. + Valuation: At 13.5 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 15%, the stock is very attractively 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 16c ahead for the quarter ended June 30, and, as cited above, 4c ahead for the quarter ended Oct 1. + 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: - The company's industry group ("Computer - Data Storage") is ranked #167 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling over recent weeks and months. -KD, November 1, 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||