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 RVSN, first for client accounts, then for my personal accounts. RADVision Ltd. designs, develops, and supplies products and technology that enable real-time voice, video, and data communications over packet networks, including the Internet and other networks based on Internet protocol. The Company's products and technology are used to develop systems that migrate voice and video communications from traditional telephone networks to packet networks. Here's why I bought this stock: + News: This morning, before the open, the company announced results for the quarter ended Sep 30. Earnings came in at 18c per diluted share (vs 7c last year and First Call 15c). Revenue was up 14% to $19.1 million (First Call $18.6 million). The company also issued fourth quarter guidance above consensus. + A "true surprise"*: For four weeks prior to the news, the stock had been trending lower. Then, this morning, the stock is soaring on extremely heavy volume. At an hour and 20 minutes after the open, the stock is up about 16% and volume is already 5x 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 this morning represents a powerful breakout from a 9-month trading range to a four-and-a-half year high. + Today, the stock is on track to meet the stringent technical buy criteria outlined in my Research Update of June 26, 2004: http://www.deencapital.com/newslett/2004/040626.129.html#3 . + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +13%, +14%, 11%, and, most recently, as cited above, +14%. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 04 vs Dec 03: 8c vs 5c Mar 05 vs Mar 04: 13c vs 12c Jun 05 vs Jun 04: 11c vs 3c Sep 05 vs Sep 04: 13c vs 5c + Very solid, though not rising, earnings-per-share estimates: According to recent data from First Call, the consensus earnings estimate for 2005 is 57c, revised downward from 58c 90 days ago (but up from 2004 actual earnings of 30c); and the consensus estimate for 2006 is 71c, unchanged from 90 days ago. + Valuation: At 21.5 times next year's estimated earnings and a projected 5-year annualized earnings growth rate of 25%, the stock is 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 the just-reported quarter cited above, which was 3c ahead. I chose to buy the stock in spite of the following negative factors: - As mentioned above, analyst estimates have not risen over the past 90 days. - The company's industry group ("Computer Networking") is ranked #106 for relative strength out of 197 industry groups tracked by Investor's Business Daily. This ranking changes daily, and it has been generally falling slightly over recent weeks and months. - The stock's 200-day moving average is falling just slightly. (And yet the stock is now trading at a four-and-a-half year high.) -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. 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||